Schools: Primary Curriculum
	 — 
	Question

Baroness Walmsley: To ask Her Majesty's Government whether they will take into account all relevant contributions to the consultation on the Rose Review of the Primary Curriculum which ends on 28 February.

Baroness Morgan of Drefelin: My Lords, Sir Jim Rose's independent review of the primary curriculum has carried out extensive consultation with teachers, subject experts, researchers and inspectors. Sir Jim will consider all contributions and evidence gained from his meetings and visits, as well as those gained from the wider consultation on his interim report. The Government look forward to receiving Sir Jim's final report and recommendations, which are expected in the spring.

Baroness Walmsley: My Lords, I thank the Minister for her reply, but will she say why the detailed programme for Professor Rose's six areas of learning was completed two whole months before the end of the consultation period, thus pre-empting anything other than minor tinkering at the margins? Will she also say why the teaching unions and local authorities have effectively been shut out, as they were told at a meeting at the department that the curriculum framework is already agreed and the QCA has nearly completed the work on the programmes of learning and progression statements? Does that not really make a mockery of the word "consultation"?

Baroness Morgan of Drefelin: My Lords, Sir Jim Rose's review is very inclusive, involving consultation, as I said, with professionals and curriculum experts. I should have said also that more than 5,000 young people have been consulted in the past year. Recent online surveys have gathered views from 700 teachers and nearly 1,000 parents. I do not accept the noble Baroness's analysis, although I will take her views back to the department and ensure that they are dealt with, along with the concern that she has expressed.

Baroness O'Neill of Bengarve: My Lords, can the Minister confirm that the procedures followed in this consultation were those to which government departments are committed?

Baroness Morgan of Drefelin: My Lords, as I said, we are very much looking forward to receiving Sir Jim's final report. He has produced an interim report, which has prompted great debate. With regard to the primary curriculum and statutory changes, there will of course, as I think the noble Baroness is inferring, be proper consultation as agreed within government.

Lord Soley: My Lords, would the Minister consider the possibilities of using exhibitions, such as the excellent exhibition at the British Library on the history of British freedoms, which are so important? There are also exhibitions on science. That is part of what we should include in the consultation, to ensure that science and history are given a high priority in primary education.

Baroness Morgan of Drefelin: My Lords, my noble friend gives me the opportunity to say that Sir Jim was very clear in his interim report that there has been concern about the focus on subjects such as history and whether we may be returning to the days when there was no subject teaching. He has been clear that that should not be an either/or choice. I believe that we should make the most of the excellent and very popular museums that we have in London. Also, as I said, Sir Jim is consulting subject experts, who are very much a part of our museum tradition.

Baroness Verma: My Lords, does the Minister not agree that subject-based learning provides children with depth and understanding of those subjects, while theme-based learning will make children jacks of all trades and masters of none?

Baroness Morgan of Drefelin: My Lords, as I just said, Sir Jim has been very clear that it is not about either/or. This review of the curriculum is looking to build on the development that children go through in the foundation learning tier into the primary curriculum and key stages 1 and 2. It is very much about creating continuity between primary and secondary. The noble Baroness shakes her head, but we have to create continuity in subjects, which means that subject teaching will remain important in primary so that we can promote that continuity into secondary.

Lord Northbourne: My Lords, does the Minister accept that the interim report strongly draws attention to the importance of developing social, emotional and relationship education? Does she agree that this subject—if you can call it a subject—or these skills are best taught partly in the classroom but also in the whole life of the school? Can she confirm, or assure the House, that all head teachers in primary schools will be given the necessary training to be able to deliver these skills effectively?

Baroness Morgan of Drefelin: My Lords, I hope that I can reassure the noble Lord. When the review was commissioned, we were absolutely clear that it needed to focus on the social, personal and emotional attributes essential for young people's health and well-being. That focus is clearly reflected in the interim report, as is the role of SEAL, which we have talked about often in this Chamber. As regards PSHE, we have already talked about the importance of training and made clear our commitment to training for teachers. Primary heads are very much part of that training need. The review is extremely important in taking stock of how far we have come with the primary curriculum and making sure that it is responsive to the needs of the 21st century.

Baroness Warnock: My Lords, could the—

Baroness Sharp of Guildford: My Lords, why did the Government think it necessary to set up their own independent review when the Cambridge review, the largest review of primary education for 40 years, was already under way? Would it not have been sensible to have waited for the Cambridge review to report and to have made suggestions after it had been published?

Baroness Morgan of Drefelin: My Lords, I am sure that there will be a great deal of cross-fertilisation between the Cambridge review and Sir Jim's review. I know that those involved have been in close contact. Those in the education community in this country are very keen to learn from one another. I am absolutely sure that the work will feed in.

Baroness Perry of Southwark: My Lords, will the noble Baroness assure us that the concerns of teachers about Sir Jim's interim report will be taken on board, not least those of the teachers of very young children who feel that the curriculum suggested in the interim report is far too rigid for three to four year-olds?

Baroness Morgan of Drefelin: My Lords, I am not sure that I caught the first part of the noble Baroness's question.

Baroness Perry of Southwark: My Lords, I asked whether the noble Baroness could reassure us that the concerns of teachers about the interim report will be taken on board.

Baroness Morgan of Drefelin: My Lords, I very much reassure the noble Baroness that continuity, as children move from early years foundation into key stages 1, 2 and then 3, is very much at the heart of what Sir Jim is looking at. The whole point of having the review is to take on board teachers' concerns about the need for flexibility and to have space in the curriculum to personalise it. That is extremely important for children coming in from early years, who may be at different stages of development and readiness for school.

Baroness Warnock: My Lords, could the Minister return to the question asked by my noble friend?

Lord Hunt of Kings Heath: My Lords, I know that the noble Baroness has been trying to get in, but we are now in the ninth minute.

Legislation Committee: Constitutional Renewal Bill
	 — 
	Question

Lord Campbell of Alloway: To ask Her Majesty's Government, further to the answers by Lord Bach on 26 January (HL Deb, cols 4—5), what consideration the Legislation Committee gave to the rule of law and other constitutional principles prior to the presentation of the draft Constitutional Renewal Bill to Parliament.

Lord Campbell of Alloway: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest, having devilled at the behest of the Lord Chancellor on draft Bills before presentation to Parliament some time ago, and I tabled the amendment for the statutory retention of the Great Seal.

Lord Bach: My Lords, the Lord Chancellor is a member of the Legislation Committee and has a statutory duty to uphold the rule of law. In addition, the committee considers the compatibility of legislation with EU law and the European Convention on Human Rights.

Lord Campbell of Alloway: My Lords, I thank the Minister for that response. I ask whether it is evident from the report of the Joint Committee that the approval sought in relation to the combined appointment of the Lord Chancellor and the Secretary of State for Justice, which was on their own draft Bill, was granted in fundamental error and was deviant from due process. Should it in fact be removed? Is it not apparent that the rule of law and other constitutional principles—

Baroness Trumpington: Hurry up.

Lord Campbell of Alloway: Is it not apparent that those principles were not entertained by the Legislation Committee? I apologise for stumbling.
	Perhaps I may ask—

Baroness Trumpington: No!

Lord Campbell of Alloway: My Lords, all right then, I won't.

Lord Bach: My Lords, I know how strongly the noble Lord feels on this subject, but I am afraid that I have to disagree with him. The past usage and custom to which the noble Lord referred has already moved on and, arguably, had fallen into abeyance well before 2005. I repeat that the L Committee or Legislation Committee is one on which the Lord Chancellor sits, as does the Attorney-General, the Advocate-General for Scotland and the Secretaries of State for Scotland, Wales and Northern Ireland, and they give their advice on any legal or constitutional issues. That is the first point. The second is that the Constitutional Reform Act 2005 gave statutory effect to two duties of the Lord Chancellor; one is to uphold the rule of law and the other, which of course is connected, is to ensure the independence of the judiciary.

Lord Maclennan of Rogart: My Lords, the House will be grateful to the Minister for that explanation, but whatever may be the workings of the Legislation Committee, the precedent for establishing the Joint Committee of the two Houses to consider the Bill enabled Parliament to consider some of these questions extensively, with good external and objective evidence. Did the Government, and do the Government, take to heart the recommendation of the Joint Committee that the Bill, far from being a constitutional renewal Bill, is a miscellaneous provisions Bill, and that the only part of it that is really ready for legislation is that which would put the Civil Service on a statutory basis? Consequently, will the Government now consider separating that part of the Bill from the rest—which raises other issues that might be considered, as the noble Lord, Lord Campbell, suggested—and get on with the reform of the Civil Service?

Lord Bach: My Lords, I am afraid I have to leave the noble Lord in a state of some anticipation because, as he knows, we plan to introduce a constitutional renewal Bill as soon as parliamentary time allows; we hope that that will be later this Session. The noble Lord will have to wait to see, if the Bill comes forward, what form it takes. We are, of course, still considering very carefully the report of the Select Committee on the draft Bill. My right honourable friend the Lord Chancellor and Secretary of State for Justice previously offered an interim response from the department but that offer has not been taken up. However, I hope the full response will come at about the time the Bill is published.

Lord Lang of Monkton: My Lords, if the Bill to which the Minister referred impinges upon the nature of this House, will the Government recognise the fundamental importance of bicamerality in our parliamentary democracy, and will he undertake that consideration of powers will take place alongside consideration of membership?

Lord Bach: My Lords, I think that the noble Lord, Lord Maclennan, was asking me about the Constitutional Renewal Bill. That Bill, at any rate in its draft form, has no relevance at all to the reform of this House.

Pensions and National Insurance
	 — 
	Question

Baroness Greengross: To ask Her Majesty's Government what is the effect of the recession on state pensions and the national insurance system.

Lord McKenzie of Luton: My Lords, for 2009-10, the in-year National Insurance Fund surplus is forecast to be £2.1 billion. Estimates made by the Government Actuary in January show that even quite substantial alterations in economic conditions should not cause the balance of the National Insurance Fund at that date to fall significantly below its current level. From April 2009, we will see the biggest increase in the basic state pension since 2001: that is, 5 per cent, with the full basic state pension rising from £90.70 a week to £95.25.

Baroness Greengross: My Lords, I thank the Minister for that response, but in the light of the current economic turmoil, which has shown the stock market to be a wholly unsuitable means of saving for retirement for people on medium and low incomes, will the Government modernise and enhance the earnings-related element of the state pension scheme, which is funded by national insurance contributions, to provide better pooling of risk, lower costs and greater stability for ordinary people to save for adequate state pensions? That was suggested in the recently published book 100 Years of State Pension—Learning from the Past.

Lord McKenzie of Luton: My Lords, with regard to S2P, we have legislated to go in the opposite direction and gradually reduce its earnings-related component. That is partly to make space for auto-enrolment, and to try to produce more clarity on outcomes for pensioners. It will then be easier for people, when looking at S2P and the basic state pension together, to understand what they will get from the state and, therefore, to build on that through personal responsibility for private savings. Concerning equity markets in the short term, I would simply comment that pensions are about long-term saving: we need to see these things in a wider context.

Lord Oakeshott of Seagrove Bay: My Lords, the Government are always telling us that work is the best route out of poverty. When will they get a grip and scrap the mandatory retirement default age of 65, which is forcing far too many people at a pensionable age out of work and into poverty?

Lord McKenzie of Luton: My Lords, the noble Lord is straying somewhat from the Question, but I will try to help him. He will recognise that we have promised to review that in 2011. It is not a mandatory feature of our system: it does not have to be adopted, and many departments—including my own—have removed it from their employment policies.

Lord Skelmersdale: My Lords, the Minister has talked about what the Government are doing for pensioners, but what extra needs to be done now that pensioner inflation is running 4 per cent over national inflation, at 9 per cent? Rather than doing nothing for pensioners, my party is committed to abolishing income tax on savings for basic-rate taxpayers and to raise pensioners' personal tax allowance by £2,000 to £11,490. Is the Minister saying that that is not necessary?

Lord McKenzie of Luton: My Lords, we shall have to see the detailed costings of the noble Lord's propositions to find out which cuts in public expenditure might have to be introduced to pay for all of that. Regarding the inflation rate that pensioners suffer, long-term analysis shows that the inflation suffered by pensioners and non-pensioners is broadly equivalent, but the Government are conscious of what has happened in the short term to prices, particularly of fuel and food. That is why, last year, we had the one-off addition of £50 and £100 to the winter fuel allowance and the extra £60 paid via the Christmas bonus. The Government are taking action, and have done a lot to combat the dire state of pensioner poverty which we inherited.

Lord Faulkner of Worcester: My Lords, I am sure that my noble friend will agree that Sir Fred Goodwin is unlikely to be particularly worried about the size of the state pension, but does he share the almost universal sense of outrage that that 50 year-old gentleman, who presided over the worst loss in the history of the Royal Bank of Scotland, can from today draw a pension of £650,000 a year? What is being done to claw back some of that money?

Lord McKenzie of Luton: My Lords, again, that question strays quite a long way from the original one but, as ever, I shall try to be helpful to my noble friend. I am not sighted on the detail, I have just seen the reports on the television—like most noble Lords, I guess. I am bound to say that that is concerning and ties into the whole issue of remuneration for senior executives and ensuring that it is tied to proper long-term performance rather than the excessive risk-taking that has brought us to where we are. I will make sure that the appropriate department writes further to my noble friend to say more specifically what measures may be possible to claw some of that money back; it is an outrage.

Baroness Neuberger: My Lords, going to the other end of the spectrum and the very poor, the Government have introduced Saving Gateway accounts for working people. If they save, 50p is given by the Government towards it, so it is half and half—it is matched. Why does that not happen for older savers who are on means-tested benefits, such as pension credit? It seems as though the wealthy are doing rather better than the poor, and poor pensioners are doing worst of all.

Lord McKenzie of Luton: My Lords, our approach to alleviating pensioner poverty, which was kick-started in 1997, was to concentrate on the poorest first via the pension credit system. That has produced significant improvements in the lot of pensioners overall. We are now spending £13 billion more on pensioners than we would have done if we had simply rolled forward the policies that we inherited. In 1997, the poorest pensioners lived on £69 a week. Now, with the uprating of the guarantee credit, the minimum for an individual is £130 a week and £198 for a couple. Significant progress has been made, but we need to continue to ensure that we build on that.

NHS: Clinical Trials
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	Question

Lord Patel: To ask Her Majesty's Government what steps they are taking to encourage clinical trials in the National Health Service.

Lord Darzi of Denham: My Lords, the Government are working to make the UK the best place in the world for health research. The NHS has a vital part to play in this, and the NHS Constitution recognises that. Our health research policy, Best Research for Best Health, will ensure that the NHS is fully equipped to make its contribution. It will ensure that we deliver our national ambition to double the number of patients taking part in clinical research trials in the next five years.

Lord Patel: My Lords, I thank the Minister for his encouraging Answer. I declare an interest: I am a member of the Medical Research Council and associated with the best university doing research in life sciences and clinical medicine. Of course I agree that much has been done to improve the climate for clinical trials, but concerns were reported recently in the press and journals about the UK not realising the full potential of the NHS in clinical trials. We have strength in life sciences and the ability to translate research into clinical medicine. We have great strength in clinical databases, and with the advance of genomic medicine our biobanks will pay a major role. However, UK participation in global clinical trials has fallen from 6 per cent to 2 per cent. Sometimes we fail to recruit any patients for some international clinical trials. Nearly 35 per cent of sites fail to recruit any patients after trial set-up. Clinical trials in the NHS are suffering. Clinical trials are an important part of quality healthcare; does the Minister think that they should be part of quality accounts?

Lord Darzi of Denham: My Lords, I agree. Innovation in science, mostly within the NHS, has significantly improved the quality of care that our patients receive in the NHS. We have seen numerous examples of this in the past 60 years. However, we can always do more, and recruitment to clinical trials is important. As it stands, the operating framework within the NHS has the following three principles. All providers of NHS care will need to increase their participation in research. The national ambition is to double the number of patients taking part in clinical trials and other well designed research studies within five years. Strategic health authorities are expected to show that NHS trusts work with the National Institute of Health Research and its clinical research network to increase recruitment to clinical trials. On the issue of whether research indicators should be part of quality accounts, I sympathise that research is a reflection of quality and I have asked officials to look into that. If an indicator is identified, I have no doubt that we will consult the service on whether it should be part of the quality accounts.

Baroness Gardner of Parkes: My Lords—

Lord Walton of Detchant: My Lords—

Baroness Gardner of Parkes: I think we just heard from the Cross Benches.

Lord Hunt of Kings Heath: My Lords, shall we hear the noble Lord first and then the noble Baroness?

Lord Walton of Detchant: My Lords, would the Minister accept that for many years the National Health Service has been regarded in the UK as an ideal environment in which to perform clinical trials and that the support that the Government have given to medical research is much appreciated? Is he able to say, however, what effect the EU clinical trials directive is likely to have in the long term on the performance of such trials? Is he aware that the very complex and at times tortuous requirements now imposed upon clinical trials for ethical reasons, particularly for multicentre trials, have led certain pharmaceutical companies to propose moving their trials overseas because of the difficulty of obtaining ethical approval?

Lord Darzi of Denham: My Lords, I am aware of the EU clinical trials directive and we have consulted our stakeholders here. The stakeholder to which the noble Lord refers, the pharmaceutical industry, has consistently confirmed that it is content with the broad thrust of the EU directive, since it reinforces systems and practices to which it already conforms. We are aware, however, that there have been some challenges for non-commercial trials and we are now working with our partners in research charities, the Medical Research Council and the National Institute for Health Research in universities, to understand these problems and resolve them.

Baroness Gardner of Parkes: My Lords, my question follows on very well from the last question. Is the Minister aware of the extreme difficulty encountered by consultants trying to do small-scale clinical research? I quote the example of a consultant dermatologist who wishes to try, on just four patients, a drug that has been widely accepted and used for 40 years without any problem. He wishes to try this on four lupus cases as he believes that it may have a use, but, under that EU directive, he finds himself stuck in the position that he has to fill in as many forms and deal with as much bureaucracy as if he were a major pharmaceutical company. I have raised this matter informally with the Minister's department. This consultant's trust cannot afford the money involved in all that bureaucracy, so cannot something be done to make it easier?

Lord Darzi of Denham: My Lords, I have already said that we shall be looking at the impact of the EU directive on non-commercial trials, but perhaps I may also say, in the context of bureaucracy, that a lot of reform has happened within the system. To name just a couple, we have created a UK regulatory and governance advice service which provides researchers, such as the consultant referred to, with free access to expert advice and information about regulation. We have also created the National Research Ethics Service, which facilitates and promotes ethical research by working to maintain a UK-wide system of ethical review via NHS research and ethics committees.

Baroness Tonge: My Lords, the Minister must realise that a new academic registrar may spend the whole of his 12-month fellowship seeking approval for a particular research project and then have to leave. We have the longest average approval time for clinical trials in the whole of Europe. As a very eminent researcher, probably one of the greatest researchers in medicine in this country, and now a Minister in this House, surely he is in a position to speed things up and make conditions better for researchers here.

Lord Darzi of Denham: My Lords, I am grateful for the noble Baroness's kind words. She asked what we need to do to reduce bureaucracy further. As I have said, we have reformed the system, but I agree that there is more to do. I am very grateful that she acknowledges the investment that the Government have made in creating 250 academic clinical fellowships across the country.

Lord McColl of Dulwich: My Lords, is it worth emphasising to the public that patients involved in controlled clinical trials receive even better treatment than those not in the trials?

Lord Darzi of Denham: My Lords, I am grateful for the noble Lord's intervention. I agree that the recruitment of patients for clinical trials has a tremendous impact on the quality of care that the NHS can provide in the future, compared with when patients do not take part in a clinical trial. I agree with the sentiment of the noble Lord's question and I have no doubt that that message and culture need to be disseminated across the NHS.

Lord Lyell of Markyate: My Lords, I declare an interest as a beneficiary of a cancer drug, Avastin, which is a standard treatment for colon cancers in the national health services of France, Germany and elsewhere in Europe. Why are Ministers not even permitting NICE to carry out trials on it in this country for this purpose, and when do they hope to give such permission?

Lord Darzi of Denham: My Lords, we have debated this issue in this House on numerous occasions. One output of the next stage review was a reform of the way that we appraise, through NICE, evidence relating to certain drugs affecting certain conditions, colorectal cancer being one. I reassure the noble and learned Lord that NICE will be looking at these drugs as we collect more evidence, and some of that evidence will come from clinical trials involving the recruitment of patients on Avastin in this country. I have no doubt that, once the evidence is available, Avastin could be one of the many other drugs that our patients receive in the NHS.

Baroness Howarth of Breckland: My Lords—

Lord Hunt of Kings Heath: I am sorry, my Lords, we have reached 30 minutes.

Arrangement of Business
	 — 
	Announcement

Lord Bassam of Brighton: My Lords, with the leave of the House, my noble friend Lord Tunnicliffe will repeat a Statement made in the other place entitled "Records of Detention: Review of Conclusions". We will take the repeated Statement at a convenient point after 2 pm.

Saving Gateway Accounts Bill
	 — 
	First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Health and Social Care Act 2008 (Registration of Regulated Activities) Regulations 2009

European Parliamentary Elections (Franchise of Relevant Citizens of the Union) (Amendment) Regulations 2009

Representation of the People (Amendment) Regulations 2009

Parliamentary Constituencies (England) (Amendment) Order 2009
	 — 
	Motion to Refer to Grand Committee

Moved By Baroness Royall of Blaisdon
	That the draft regulations and order be referred to a Grand Committee.
	Motion agreed.

Business of the House
	 — 
	Timing of Debate

Moved By Baroness Royall of Blaisdon
	That the debate on the Motion in the name of Lord Marlesford set down for today shall be limited to five hours.
	Motion agreed.

Foreign Policy
	 — 
	Debate

Moved By Lord Marlesford
	To call attention to new challenges in foreign policy, and to move for Papers.

Lord Marlesford: My Lords, it is a great honour to be asked to open this debate. When I saw the list of distinguished speakers, I felt greatly over-promoted. However, my deficiencies will be more than made up for when my noble friend Lord Howell of Guildford replies to the debate from our side. All I can hope to contribute are some thoughts on the backdrop to a generally unhappy situation facing the world.
	A tidal view of history explains why it is so hard to decide in which direction events are moving. Tides rise and fall. The turn of the tide is especially hard to spot because, unlike lunar tides, there are no timetables, and surface storms can conceal what is happening in the longer term. Most political thinkers and leaders ride the tide, or are swept away by it. A few play a part in turning it. Martin Luther, Karl Marx, Deng Xiaoping and Margaret Thatcher were tide turners; so perhaps were Ronald Reagan and Pope John Paul II. Now, Barack Obama has been elected on a wave of hope to lead his country.
	Each tide-turner has identified a need for change and met the challenges that change creates. What are the challenges from which new opportunities may emerge? The first and greatest challenge is for national leaders—and not only politicians—to understand how people really feel and, thus, why they react as they do. Nowhere is this more important than under the shadow of world economic collapse. Ordinary people do not understand what is happening and nor, indeed, do the pundits. Having been swept along by a tide of credit, much of it toxic to borrowers as well as to lenders, they are waking up to a day of reckoning. That tide could still turn into a tsunami. Part of the prosperity of the past decade has been an illusion. Consumers have now changed direction and it is no good economic and political leaders urging and expecting them to spend to support demand. A cat that lands on a hot stove will avoid stoves, hot or cold, for a long time.
	An early casualty of a depression is international altruism. It is replaced by domestically perceived self-interest. Protectionism leads to retaliation and so extends and prolongs a world recession. The bid by Congress to include the "Buy America" provisions in the American stimulation package was the first challenge that President Obama faced. He was helped to mitigate it by the immediate and very effective protests from the EU Commission. Perhaps predictably, China has indicated a determination to tackle the slowdown without resorting to protectionism. China was one of the first to spot and face the realities of our new economic situation.
	Countering protectionism is, I believe, the top priority for the EU today. It is far more urgent than haggling about Lisbon. I foresee serious problems, particularly in France where President Sarkozy is already advocating blatant economic nationalism. Admittedly, the shadow of 1968 hangs over Paris. However, if members of the EU introduce internal protectionist measures, whether for goods or workers, it will contradict not only the terms of the single market, but the whole concept of the treaty of Rome and its successors.
	Perhaps the greatest and most dangerous political challenge is the West's present conflict with Islamicism. It is perceived through much of the Muslim world, especially in the fragmented Middle East, as a re-enactment of the Christian Crusades. The thousand-year memories of the massacre of Muslims by Christians in Syria and Palestine had faded until they were reawakened by European colonialist ventures in the latter part of the 19th century. With the end of the Ottoman Empire those memories slumbered again, but resentment of western exploitation—sometimes amounting to expropriation—of Muslim-owned oil led to the formation of OPEC in 1960. The subsequent oil shocks were the equivalent of huge tax hikes on the populations of oil-importing countries.
	Since then, there has been a tidal change, with the Islamists, whose ideology is sometimes so extreme as to be a perversion of Islamic teaching, setting the agenda. Al-Qaeda has been in the vanguard, invoking jihad partly to settle scores inside the Muslim world, but also evoking the history—and probably the myths—of Saladin against the West. President Bush's use of the word "crusade" after 9/11, reinforced by his "axis of evil" speech of 2002, has empowered the fundamentalists and played into the hands of the jihadists.
	I believe that the West must show a new respect for the ancient and pre-Islamic civilisations of the Middle East. I believe that Turkey and Syria could then offer keys to progress on the Israel/Palestine situation, which continues to drip its poison into the area. This challenge is largely in the hands of the United States. Without American weapons and the annual military grant of some $2.4 billion, Israel would be defendable only with its own nuclear weapons. If a two-stage solution is achievable, it will have to be recognised by Israel as its only viable option. Even on a small scale, Israel has been demonstrating that military can now only reveal weakness. The failure of the 2006 Hezbollah war may have been repeated in Gaza this year because Israel's declared intention of ending rocket attacks does not seem to have been achieved. History shows that eventually, however unpalatable, radical movements with popular support have to be engaged. Equally, Hamas and Hezbollah will have to accept that their own declared aims are not achievable. But with perhaps four years to get there, an American military commitment to a two-stage solution could produce peace.
	Iran is another country which has been sadly mishandled. The Shah, a weak and rather vain man whose overthrow 30 years ago was last month celebrated in Tehran, alienated his religious subjects by confusing modernisation with the introduction of some of the least attractive aspects of western culture. We should not be surprised that accusations of western global arrogance land on fertile ground in Iran. The Anglo-American monarchist plot in 1953 which overthrew the elected Prime Minister Mosaddeq because he had dared to nationalise British-owned oil is still remembered, and America's decision to back Saddam Hussein when he attacked Iran in 1980 cost more than 1 million Iranian lives. Iran is another country whose long and distinguished history entitles it to our respect. We, after all, are relative newcomers to civilisation. Yet we patronisingly appear to deny the Iranians the right to nuclear reactors for power generation lest they be used for building nuclear weapons.
	Nuclear weapons are probably as controversial as they have ever been. There are those who say that the great challenge is to rid the world of such abominations, and that every country which joins the nuclear club increases the chances of world disaster, so almost any steps are justified to prevent entry to it. I myself am not of that persuasion. First, science, however frightening, is irreversible. Secondly, had the bomb not been deployed against Japan, the world would never have recognised the horrors of its effects until uninhibited competitors, probably the United States and Russia, had resorted to a nuclear exchange. After that, there would have been little further debate because there would have been no debaters. Nuclear weapons have been clearly demonstrated as unusable. They kept the peace during nearly half a century of cold war, and perhaps what is most important is that they made conventional warfare between nuclear states too risky. Indeed in this they may in recent years have prevented serious conflict between India and Pakistan over Kashmir.
	That there should be as few nuclear states as possible is desirable. The Nuclear Non-Proliferation Treaty ensured that the number of states with nuclear weapons rose only from five to nine over 40 years. Next year there will be an opportunity to reinvigorate it, and it will be worth paying a high price to do so. For example, the idea of the central provision of nuclear fuel for those countries that wish to generate nuclear power should be fully endorsed. A price not worth paying is a pre-emptive military attack against a state thought to be acquiring nuclear weapons. I refer of course to the possibility of an attack by Israel on Iran. Nonetheless, progress towards nuclear disarmament with a considerable reduction in the thousands of warheads still held by the United States and Russia must be a priority.
	My instinct, but not yet my conviction, is that we should renew our own Trident nuclear deterrent. However, the two carriers are another large cost and the fleet of smaller ships is dangerously reduced. Nor are supplies for the Army or the Royal Air Force what they would like to have and what I believe they need. Our Armed Forces are already overstretched and it is an act of political immorality to commit to an operation without the best available—I deliberately say available rather than affordable—equipment. Equally, to embark on military action without adequate resources is to risk not only lives but also the reputation of our Armed Forces. That, sadly, seems to have been one result of our recent operations in the Basra area where the Americans had to sort out the mess.
	This brings me to changes in Russia. Russia, under the relatively benevolent if shambolic rule of Yeltsin, was revealed as having been a much overestimated enemy of the past. Sadly, under Vladimir Putin, Russia is not contributing to world stability. The reality is that Russia is unlikely to be a military superpower again. That combined with the humiliation felt by the old Soviet nomenklatura, of which Putin was a junior member, with the dismemberment of the Soviet Union conditions Russian actions today. The Russian economy has cashed in on the commodity boom but it has failed to develop in any other meaningful way. Russia manufactures little that anyone wants to buy, with the exception of a few sub-prime weapon systems. Its population is declining and its expectation of life dramatically so. Some in Russia look back with nostalgia to the Soviet days.
	Democracy has little appeal to the Russians. There is no concept of accountability for power. You have power and you use it. Putin, whose macho character is reflected in his judo black belt, is very popular and could decide to do another two terms as president, which would be 12 more years under the new rules, after the more reflective yoga-loving Medvedev. Meanwhile, Putin's primary aim is to turn Russia into an energy superpower. However, he will do whatever it takes to prevent either the Ukraine or Georgia joining NATO. The Russians see the recent Georgian adventure as a successful humiliation of the United States, which fortunately lacked the means to counter it.
	It should not be necessary to argue the case for diplomacy rather than military action but I fear that it is. One rule of diplomacy should be that the more tyrannical a Government the nicer you should be to their people. Military action must always have a clear political objective and that objective must be achievable only by military means and not by diplomacy alone. The case for the 2003 Iraq war was at least arguable. Total removal of Saddam and his wicked brood has now left Iraq free to make a fresh choice between continued sectarian strife and some form of secular democracy. It is too early to say whether it has been justified.
	I find the case for military operations in Afghanistan far less arguable. History has repeatedly demonstrated that Afghanistan is a country where invaders can win battles but not wars. Not even the Russians have had a more painful experience than the British of the dark and bloodthirsty convolutions of Afghan politics where participants in warfare can change sides with lightning rapidity. However, one real challenge and opportunity for progress is to deal with the opium problem.
	I turn to our crucial relations with the USA. President Obama's writings before he appeared on the presidential horizon suggest a strong Anglo-Saxon dimension in his credo. That gives us opportunities for a positive relationship with the new president with a dialogue on the basis of intellectual equality. We must never again play the role of lapdog to America, as I fear we have done in recent years.
	Tragically, America has used much of its military might to reduce its influence in the world. In spite of the disparity of power between us, we have much to contribute in one of the president's top priorities: to reclaim the moral high ground. The climb to do so will be steep and hard. Of course, the current economic crisis will divert President Obama from spending the time he probably would wish on foreign policy. However, he has a strong Secretary of State and two envoys of distinction.
	In arguing for diplomacy, one must also argue for the time and resources for diplomacy to work. I recognise that there are some matters—including protectionism, to which I have already referred—in which our interests can be well met by EU representation. I would, however, be most unhappy if the projected EU foreign service was ever seen as a replacement for our own embassies. How could it replace our national, commercial and defence interests, or, indeed, conduct liaison on our behalf with foreign security and intelligence services?
	Do not let us forget that in Britain our ministry is not the Foreign Office but the Foreign and Commonwealth Office. It used to be staffed by the elite of British brains and talent; now it is of more uneven quality and morale inside it is falling. In recent years there have been many attractive and well-paid opportunities outside the Civil Service; however, there may now be some outstanding people who could be recruited to the FCO as late entrants. Do not allow the Treasury to nit pick pay and conditions; there is plenty of over-rip fruit to be disposed of in the home departments. Diplomatic postings are no joy ride; there are many uncomfortable and dangerous posts. I suggest that one talented diplomat is worth more to Britain than the cost of a dozen government checkers and inspectors.
	Political leadership of the FCO is crucial. We have had many distinguished Foreign Secretaries, two of whom are with us today. Jack Straw is a politician of substance. The FCO has been strengthened by the arrival of the noble Lord, Lord Malloch-Brown. I am sorry that he is not with us today but I entirely understand why he cannot be. David Miliband is very bright but I can think of no one better fitted by political experience and deep historical scholarship to take over responsibility for the conduct of our foreign policy than my right honourable friend William Hague.
	In 1848 Lord Palmerston declared:
	"We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual and those interests it is our duty to follow".
	The United Kingdom has two great privileges earned by our national history: first, we are a permanent member of the Security Council; secondly, we are the founder of the Commonwealth. These should help us to understand and respect how those in other countries feel. In that way we can advance our own perpetual interests by offering a guiding hand to friend and foe. I beg to move.

Baroness Amos: My Lords, I thank the noble Lord, Lord Marlesford, for opening the debate and for his wide-ranging speech. The debate comes at an important time, as our foreign policy challenges are exacerbated by the global economic downturn. From a British foreign policy perspective, I hope that we continue to take an integrated approach, with our foreign policy informed by defence, development, economic, environmental, trade and other factors.
	The strength of British diplomacy has always been in its considerable reach, flowing from our history and, indeed, from our membership and active participation in a range of international institutions, from the United Nations and the World Bank to the European Union, the Commonwealth and NATO. The scale of the current foreign policy challenges makes it more important than ever that we use not only our alliances but our capacity to work in partnership and to build bridges across countries and continents.
	There has been a significant change in the landscape, in particular with the new United States Administration, which offers a unique opportunity to reassert the place of the United States as a force for good in the world. I have seen the recent enthusiasm of the American people for a more constructive role in the world, although I am mindful that this may be undermined by the economic recession and a push for greater protectionism to safeguard jobs. The noble Lord, Lord Marlesford, made this point with respect to China and the European Union.
	Other noble Lords will speak about challenges in the Middle East, in particular around the issues of peace and security; about issues of governance and human rights; about our relationships with India, China and Asia; and about Europe and the importance of the European Union exercising political as well as economic influence. In my brief remarks, I will focus on Africa, particularly sub-Saharan Africa. I declare an interest as chair of the Royal African Society.
	We in this House have often debated the development and governance challenges facing the African continent, but we have not always looked at the broader strategic importance of the continent to our global foreign policy objectives. Africa is a continent of just under 1 billion people, a significant percentage of whom are young. There are 53 countries and great diversity, with more Muslims than in the Middle East. These countries need to be engaged in the global debate about peace and security, the environment, the global economy, trade and development. They also need to be engaged in the wider debate about the values and principles that frame the development of our countries, both domestically and globally. We must ensure that African leaders and peoples participate in our discussions about how we can live together in our world, which is one of the most important issues facing us today, given the ethnic, cultural, religious and other tensions that confront us.
	The significant challenges facing the African continent have enormous foreign policy implications. I will touch on two areas: peace and security, and the economy. Conflict in Africa costs an estimated $18 billion a year. One study has estimated that £1 spent on conflict prevention generates more than £4 in savings to the international community. The Human Security Brief 2007 highlighted a continued positive trend in conflict reduction in Africa, with a decline in the overall magnitude of conflict. In the seven years between 1999 and 2006, the number of armed state and non-state conflicts fell by more than half, and there has been an increase in the number of negotiated settlements. When we look at some of the longest-running conflicts on that continent, it is clear that one side cannot win. In this respect, the roles of African regional institutions, the African Union and the UN have been particularly important, with the added impact of NGOs pushing for greater international activism.
	It is clear that sustained attention by groups of states working with the United Nations and acting through diplomatic, political and economic channels to support peace processes and to assist countries emerging from conflict is important for post-conflict peacebuilding and development. We need to guard against the contagion effect of these conflicts on neighbouring countries, leading to regional and continental instability. We cannot be complacent, despite the progress that has been made. Instability remains a major problem in central Africa and the Horn. Peace in Sudan is still very fragile. We saw spiralling intercommunal violence in Kenya last year and we have seen rising violence in Zimbabwe and the Niger delta.
	Too many states are fragile or failing. I hope that our Government will continue to play a positive role. Our knowledge and experience are vital and we could exercise considerable influence working with the United States, the European Union and other partners, but also with the African Union and African partners. The role of the international community in reducing conflict and instability remains vital and it is clear to me that our Government need to stay engaged. Our contribution to peacekeeping and peacemaking, our diplomatic efforts, our political contacts and indeed our reputation for fairness ensure that we have significant influence.
	I turn to economic issues. The timing of the international financial crisis in many ways is a particularly cruel twist for Africa. In recent years, countries in sub-Saharan Africa have enjoyed some of their highest growth rates in decades, thanks both to favourable external conditions and to improved domestic policies, all of which has contributed to creating more stable and better governed societies. In regulatory reform, 2008 was also a record year for Africa, with three of the world's top 10 performers in business regulation coming from sub-Saharan Africa—Senegal, Burkina Faso and Botswana—helping to assist not only domestic but also foreign direct investment. Africa recorded average growth rates of some 5.4 per cent between 1997 and 2007, and rising oil prices also helped Africa's seven biggest oil economies, which are home to 27.7 per cent of the continent's population.
	All that, however, is changing. A slowdown in private capital flows will adversely affect economies that have been relying on those flows for much needed investment. Commodity prices are falling and remittances, which run at about $15 billion a year, are likely to be affected, as is foreign aid. I recognise our own Government's commitment to maintaining aid flows, but of course the fall in the value of sterling has had a negative impact. I am pleased that our Government and indeed the Prime Minister are showing leadership on this issue. Last week, he announced that key additional representatives from Africa and Asia would be asked to attend the G20 financial crisis summit, as only South Africa is a member of that group.
	I end by asking my noble friend to advise on the key issue of the reform of the international institutions, where Africa needs to have a stronger voice. I am by nature an optimist. I think that the next two years will be very difficult, but it is crucial for us in our foreign policy role to ensure that we maintain our contact with and our interest in African issues.

Lord Wallace of Saltaire: My Lords, I thank the noble Lord, Lord Marlesford, for the tone with which he opened this debate. I agree with a good deal of his speech, particularly the emphasis on the new challenges we face.
	I want to talk about the challenges that are posed for British foreign policy. We are, after all, in a transformed world in which the likelihood of major war between states is now very low. We face new challenges: global economic co-operation and the creation of a more sustainable, but still open, global economy; the enormous threat of climate change and the need for global co-operation and changes in domestic policy throughout the world to cope with that; the related threat of population growth, with another 300 million to 400 million people in Africa in the next 20 years and a similar number in southern Asia, with all the problems that that brings in terms of unemployed youth and the temptations of radical ideologies, whether secular or religious, that unemployed young men fall prey to; state failure and state collapse; and migration on a large scale, which will hit the richer countries of the world.
	We know that we need much stronger regional and global governance but we are stuck with a world system in which nearly 200 state entities cling to their sovereignty and indeed a popular narrative in Britain which clings to our sovereignty as well while suggesting that others should co-operate more. There are some real challenges, therefore, for British foreign policy. Our foreign policy posture looks back—indeed, it is in many ways nostalgic. We talk about Britain as a world power, punching above our weight. We emphasise our "independent" deterrent. We wish to invest in aircraft carriers. The whole narrative of British foreign policy is, as Tim Garton-Ash has written, a footnote to Churchill. He defined Churchill's view of British foreign policy as an unambiguous commitment to the United States and an ambiguous commitment to Europe.
	I find on the Conservative Party website something that Churchill himself could have said to define the Conservative approach to British foreign policy today:
	"Britain enjoys a unique position—it is the place where America, Europe and the Commonwealth meet. Our outlook and responsibilities have always been global".
	That is good, old-fashioned nostalgic stuff.
	Tony Blair's rhetoric was pretty similar and if one looks for the foreign policy of a post-Blair Labour Government, the most appropriate thing is to quote the title of a New Statesman article:
	"Notes on a post-Blair foreign policy".
	That is perhaps about as far as they have got.
	We have some real challenges therefore for British foreign policy: what we can afford, with whom we work and what we put first. The Conservatives so far fail on all of these. David Cameron suggests that the problems of the economy are domestic and that it is all therefore the Government's fault. We know that it is far more complicated and global than that. William Hague suggests that we are threatened by the concept of a European Army, disregarding everything that Michael Portillo as Secretary of State for Defence did to promote European defence co-operation. It disregards even more, as I discovered last night, what Sir Alec Douglas-Home said 38 years ago when he was Foreign Secretary. When proposing British membership of the European Union, he said that Britain should find and pursue effectively practical joint defence policies in Europe. The Daily Mail did not like that so the Conservatives and Labour have now gone back on it.
	Conservatives, as we know, have been colonised by right-wing think-tanks in Washington and now face the danger that, as the Obama Administration talk about a transatlantic relationship between the United States and the major European governments collectively, the Conservatives will be committed to an exclusive relationship with Washington when Washington will want a broader relationship with Europe. Britain cannot have a coherent foreign policy unless it has a coherent European policy. My party will be giving this message very strongly as we approach the European elections and as we pick up the inconsistencies of a Conservative Party which finds it extremely difficult to cope with the whole European dimension. If we want to co-operate on climate change, economic recovery, migration or terrorism we have to start with the regional dimension before we go on to the global.
	With regard to the Government, we are led to believe that Gordon Brown has now succeeded in going to Washington before President Sarkozy and Chancellor Merkel but of course after the Japanese Prime Minister. We will hear more about the wonderful special relationship in which we accept 15,000 American troops in Britain under agreements shaped in the early 1950s, many of which have never been debated in Parliament. I came across an interesting quote some months ago in Kissinger's memoirs in which he said how refreshing it was to meet Edward Heath as British Prime Minister, someone who saw the US relationship with Britain in terms of interests and not in terms of sentiment. I wish we could have a Prime Minister and a Foreign Secretary now who would see the same.
	I regret that the British Government have not responded to President Sarkozy's initiative for closer, franker British co-operation in foreign policy and defence or to invest in a positive relationship with the German Government. I regret that our Middle East policy follows the American perceptions far too closely, although we must hope that shifts in Washington's policy will in turn lead to a shift in London.
	The Liberal Democrat response to all of this is that we should cut our coat according to our cloth. We should co-operate with our neighbours at least as closely as with Washington. We should pursue a transatlantic relationship based on interests and not on illusions or sentiment. We note how enormously overstretched we are in defence and that we have to have a radical review of what we can afford in defence terms. That may pose large questions about future defence commitments and it certainly requires us, as my much regretted friend and colleague Tim Garden used to argue, to go further down the road of co-operation with our French partners and with others across the channel. We need a strong push for nuclear disarmament built around the review of the non-proliferation treaty next year and we must be prepared to think through what that means for the renewal of our own nuclear deterrent, an enormous cost hanging over future defence procurement which we have to start paying heavily from 2011 to 2012 onwards.
	Lastly, we have to explain to our public the world in which we live, and that is the biggest foreign policy challenge that British political leaders now face. For too long, Governments, both Conservative and Labour, have been frightened of the Daily Mail and the Murdoch and the Rothermere press. For too long, they have gone on pulling out the old nostalgic ideas without trying to educate our public in the world in which we now live. Britain is not a global power with global interests distinct from our European neighbours. Let us just look at how much more the Germans export to China, Brazil and Russia than we do; let us just look at how much more German investment there is in Latin America. If Britain is a global power, the noble Viscount, Lord Montgomery of Alamein, may wish to say, it would help if we paid a little more attention to Latin America, for example.
	So we need to explain to our public what is possible, what we can afford, where perhaps we need to be a little more modest, certainly where we need to co-operate a great deal more actively with our European neighbours; and design a foreign policy which addresses the challenges of 2009 to 2020, not of 1945 to 1960.

Baroness D'Souza: My Lords, my thanks, too, go to the noble Lord, Lord Marlesford, for leading this important debate. I shall address a particular foreign policy challenge, that of Afghanistan, a country with which I have been associated for almost 30 years.
	During the past eight years, billions of dollars have been poured into Afghanistan along with many thousands of foreign soldiers and hundreds of aid agencies. Incalculable numbers of visits by politicians and dignitaries from all over the world have taken place and yet, despite all this, there has been a slow but inexorable decline in security, in the rule of law and in the overall reduction of poverty.
	Records show that while registration of girls in grade 1 is about 40 per cent, it falls to 1 per cent by grade 12, and this largely due to lack of security and Taliban action. The culture of violence and impunity prevails, exercised not only by the Taliban but by the private militias of erstwhile warlords, many of whom are suspected of war crimes and who continue to occupy key ministerial posts and use their positions to consolidate their holds on society and now on the drug industry. While a small coterie has become immensely rich, real poverty affects some 75 per cent of the population. Afghanistan is now defined as a narco-mafia state, with the drug networks linked to terrorism. The Taliban, it is said, has provided more resources from the diaspora than has the international community.
	There are of course some good news stories: under the national solidarity programme, villages were each given some US$20,000 under strict conditions and now number approximately 22,000 widely spread throughout the country. Participants report that this was the first time that they felt like citizens, because they were trusted sufficiently to make their own decisions. Approximately 80 per cent of Afghans have access to primary health care, albeit rudimentary; transport infrastructure has improved; nearly 2 million refugees have returned; and there is growing private sector investment in telecommunications, construction and small industries. For example, the Logar copper reserves have attracted investments of $2.8 billion, elections have been held, a National Assembly inaugurated and a further election will be held this year.
	These gains, welcome as they are, are not enough. So what went wrong? The list is long but some key errors can be identified. Not enough money was allocated directly to the Government at their most vulnerable early stages. For example, in 2001, Afghanistan had approximately 240,000 civil servants who had somehow managed to keep the country going through years of civil war and yet donors chose to give more than $2 billion to their own agencies.
	As a result, the UN and NGOs set up organisations parallel to the Afghan Government who received only $20 million to fund their entire budget for the first year. This was a key error and resulted in humiliation, dysfunctional ministries and a vast discrepancy in salaries, which, in turn, drew competent civil servants out of government service to become highly paid drivers and translators.
	Meanwhile, the Government were hard put to find salaries for doctors, teachers and the police. Once the full impact of this policy became clear, there was a volte face whereby all money went henceforth to the Government, but unconditionally and with a total lack of accountability.
	Another serious gap lay in the failure to implement much of the Bonn agreement. For example, it had been agreed that provincial governors would be appointed through the Civil Service Commission. This is not happening, nor has it ever, which allows, in turn, for patronage and allegiances to take the place of proper government procedure.
	Donors felt that support for police training was outside their mandates and, again, donors' adherence to millennium development goals meant that there was almost no investment in secondary and tertiary education, which has seriously depleted Afghanistan's skills base.
	The international community is no less culpable for the current state of Afghanistan. The confusion of priorities is astonishing to witness. Primary tasks were seen as eliminating the threat of terrorism, or the threat of drugs, or to accommodate, rather than confront, local criminal networks. By now Helmand is considered to be British, Uruzgan is Australian, Kandahar is Canadian and so on.
	The aid agencies planned and implemented thousands of small projects, often resulting in haphazard coverage; three wells in one community and none in another, for example. The projects largely ignored the civil service and the need to capacity build at the most local levels. The lack of coherence and co-ordination has led to fragmentation, corruption and the infiltration of the Taliban.
	Among all the priorities that the different foreign actors took upon themselves, two basic, clear and urgent necessities—namely, state building and security—were largely ignored. These type of early errors fly in the face of all that we know about the reconstruction of post-conflict societies. Do we really have to keep learning that institution building and national security are the top priorities on day one?
	What can be done? What can be rescued from this jumble of conflicting efforts? First and foremost, no country can be stable unless it has a functioning state that performs key functions for its citizens. Researchers in this field say that this necessarily invokes at least four factors: a leadership and management team with a commitment to good governance based on the rule of law; relentless focus on national accountability systems; the development of a vibrant civil society; and, finally, the development of small and medium-sized firms that will give citizens a stake in the future of their country. Sadly, none of these factors operates in Afghanistan at the moment.
	A clear and consensual plan of action would enable political coherence, a united front against both the drugs industry and the Taliban, and, ultimately, against criminal networks. A unitary security force with a strategic plan, rather than the present parallel structures with differing pay and regulations, would help to prevent fragmentation and penetration of the armed forces by drug networks. Collective accountability could ensure that revenue is directed towards government and not to warlords and commanders. The evidence suggests that what is on the books is a great deal less that what is collected.
	Military assistance might focus on protecting villages rather than searching out insurgents—which, in effect, is the cause of most military and civilian fatalities—and on the police, together with involvement in a massive programme of public works in co-operation with Afghan construction companies. There are still opportunities to achieve these targets in Afghanistan if the international community is prepared to act collectively and toughly and provide sufficient resources for Afghanistan to work towards its own future. The UK is in a strong position, in that it is a major donor, with a leadership position within the World Bank. DfID has done excellent work in some areas on institution building. Given these strengths, perhaps the UK can go further in promoting an agreed national plan for Afghanistan together with the means to implement it.

Lord Howe of Aberavon: My Lords, like my predecessors, I congratulate my noble friend Lord Marlesford on a quite remarkable speech introducing this debate—a three-dimensional tour d'horizon, which covered almost every topic with great consistency. I follow that by congratulating the noble Baroness, Lady D'Souza, on a compact presentation of an expert insight into an important subject. For my part, I intend to focus largely on the resources, skills, partnerships and alliances with which we should respond to the challenges identified by my noble friend Lord Marlesford. The question is all the more necessary in the light of the economic and financial pressures that we are facing today.
	I start with a word about defence. We have long been accustomed, in government or out of it, to being able to fulfil our central objective, which is the availability of first-rate, world-class strategically mobile conventional forces. We have seen that displayed from the Iranian embassy in London to the Falkland Islands and the Gulf War. Today, however, despite the sustained, wholehearted commitment of our forces to the conflicts in Iraq and Afghanistan, one gets the increasing impression of repeated delays and inadequacies of equipment in almost every direction. Sadly, that is accompanied, as my noble friend pointed out, by a decline in morale and even, indeed, reputation, which is largely undeserved. The whole of this was summed up by an Economist headline the other day: "Overstretched, overwhelmed and over there".
	In the mean time, there has been an important intervention from the noble and gallant Lord, Lord Bramall, the noble Lord, Lord Ramsbotham, and others in the letter that they wrote to the Times on 16 January. They drew attention to the way in which the world is changing, a point also touched on by my noble friend Lord Marlesford. The issue of a world free of nuclear weapons is now firmly on the public agenda. It was placed there initially, a year or more ago, by a galère of distinguished American statesmen, including Secretaries of State Shultz and Kissinger, Secretaries of Defence Perry and Carlucci and Senator Sam Nunn. It is now known and widely supported as the "nuclear security project". It has been endorsed by many Members of this House and recognised in the qualified response from my noble friend Lord Marlesford.
	The letter to the Times written by the noble and gallant Lord and other noble Lords said that having,
	"placed the issue ... firmly on the public agenda ... it is difficult to see how the United Kingdom can exert leadership and influence on this issue if we insist on a costly successor to Trident that will not only preserve our own nuclear-power status ... but might ... encourage others to believe that nuclear weapons were still, somehow, vital to the secure defence of self-respecting nations".
	The letter continues, in the context of our own defence strategy:
	"Rather than perpetuating Trident, the case is much stronger for funding our Armed Forces with what they need to meet the commitments actually laid upon them".
	That seems to be the important conclusion. I recognise that the difference between my noble friend and me is not as large as all that, because the process that one undertakes by accepting that analysis can be conducted with respect for both arguments.
	On civil expenditure, similar tensions exist between the Foreign and Commonwealth Office and the Department for International Development. In today's complex world there can be no doubt about the huge importance of having a high-quality Diplomatic Service, for which we are traditionally renowned. French Foreign Secretaries have constantly said that our Diplomatic Service is "second only to our own". I have heard similar tributes paid to our Diplomatic Service by Chinese Foreign Ministers with whom I have negotiated. This House is filled with noble Lords who are lively exhibits in support of my proposition. However, there is no doubt now about the erosion, as a result of pressure from the Treasury, of that quality. In short, there can be no doubt that there is an imbalance between the underresourced Foreign and Commonwealth Office and the much larger DfID budget. That imbalance is quite literally crippling our diplomatic efforts. I say that without being insensitive to the importance of the DfID budget, which was well spelt out by the noble Baroness, Lady Amos. However, the slogan "Making Poverty History" attaches a magic to that half of the equation, leading to an imbalance that inhibits our capacity in other respects.
	In what other ways should we promote British interests? Our claim to superpower status was extinguished about a century ago and our claim to great power status shrinks alongside the emergence of the great Asian nations, China and India, and even alongside the untidy and unattractive symbol of Russia struggling to recreate itself. One demonstration of that is the fact that the US Secretary of State, Hillary Clinton, paid her first overseas visit not to Europe but to the Pacific states, indicating that America is a trans-Pacific nation.
	In response to these diverse challenges we have bilateral links that are of real value and importance to us. We have them with India because of our long association with it and we have them with China because of our increasingly intimate association with that country. As my noble friend Lord Howell is fond of pointing out, we have such links with a range of Commonwealth countries. That point was emphasised by my noble friend Lord Marlesford. We should never forget the value of that relationship.
	Correspondingly, however, we should not overlook the extent to which, on many major issues, we share pressing and continuous common interests most of all with the leading members of the European Union but indeed with the whole of the Union. My noble friend Lord Howell has underlined the importance of that in recent interventions. It is not a question of choosing between the Commonwealth and Europe, or in any other narrow fashion. Despite the diversity of opinions in my own party, I am glad to say that its leaders have clearly expressed their recognition of the importance of our European relationship. My right honourable friend William Hague made his maiden speech almost 30 years ago at the astonishing age of 16 in a debate at the party conference to which I replied. He has lived up to my expectations. He has said:
	"I am as convinced as ever that our place is to be in Europe but not run by Europe".
	Nobody has ever said that we were going to be run by Europe. He made that central point. The leader of the Opposition, David Cameron, has said:
	"We believe it would be wrong for Britain to leave the European Union".
	That is a simple summation.
	I close by drawing attention to a statement to similar effect made long before those, and made even more clearly and with higher authority. It comes from a document that emerged after I had been in partnership on the Front Bench with my noble friend Lady Thatcher for some 10 years, and in partnership as Foreign Secretary for a couple of years. It emerged on 24 June 1984, on the eve of the Fontainebleau European Council, at which we were able—perhaps I should more rightly say that she was able—to secure the success that we needed in relation to the British budget question. On the eve of that conference, we circulated a document on the future of Europe, which set out our wider vision of the organisation. It talked about political co-operation, which was then the right jargon. It stated:
	"The Ten need to act"—
	there were only 10 of us then—
	"with more vigour and greater purpose. Cooperation should not just be a matter of making declarations in the face of increasingly complex challenges. The Ten have the weight and must show more political will to act together: concentrate their efforts where their leverage is greatest and their interests most directly touched e.g. in the Middle East and Africa; and recognise that influence does not last if not backed by the necessary resources. Member States must take more seriously their solemn commitments to consult and take account of partners' views and work for common positions. The objective should be the progressive attainment of a common external policy".
	On defence and security, the document states:
	"Our objective must be to strengthen the European pillar of the Alliance and improve European defence cooperation".
	Those objectives were valid at that time and remain valid today for any Government. I hope that they will be taken fully on board by the prospective Conservative Government under the leadership of my right honourable friends David Cameron and William Hague.

The Lord Bishop of Ripon and Leeds: My Lords, I, too, am very grateful to the noble Lord, Lord Marlesford, for initiating this far-reaching debate. I am also grateful for the emphasis he laid on the importance of taking seriously both history and ideas if we are to develop an effective foreign policy for the future.
	Today we have the opportunity to discuss foreign policy in the round and examine the principles and thrust of our response to its new challenges. I was particularly grateful to the noble and learned Lord, Lord Howe, for raising nuclear weaponry and its future within our world and our own policy.
	I want to concentrate on two areas: the need to refresh the post-1945 world order at a time of economic challenge and, in so doing, to take full account of differences in ideology and religious perception across our world. In his seminal July 2007 lecture, "New Diplomacy: Challenges for Foreign Policy", the Foreign Secretary spoke of the need for today's foreign policy to reflect the new distribution of power. We have already had references in this debate to the growing strength of China and India as being key to the need to innovate and modernise existing international bodies and structures. Over the past few months this need has been amply illustrated by the complete inability of existing international financial institutions to provide collective action on a global scale. I was particularly grateful to the noble Baroness, Lady Amos, for weaving together foreign and economic policy when discussing the situation in Africa, for the two are deeply dependent on each other.
	Therefore, I am encouraged that the Government have made reform of the international financial institutions a key element of the package of proposals to be considered by the G20 when it meets in London on 2 April. If such reforms are to be sustainable, the financial institutions need to be publicly and transparently accountable. One way to go some way in this direction would be to ensure that developing and developed countries had equality of voice and of vote. For this reason, many from this Bench will support the "Put People First" rally in London on 28 March.
	Secondly, and still more crucially, we need to tackle the battle of ideas and we need to do that thoroughly. Sometimes it seems that every newcomer on taking up their role with regard to foreign affairs makes a promise to tackle that battle of ideas; George W Bush spoke in September 2001 of "waging a war on ideas", but then actually failed to do any such thing. The Foreign Secretary in his 2007 speech spoke of the ways that winning the battle of ideas was fundamental to securing Britain's foreign policy priorities. Yet I am far from convinced that the foreign policy establishment understands sufficiently the interaction of politics and religion in global politics, whether that be in Gaza or Iran.
	Too often we are taken away from the important by the urgent. We make necessary and right responses to particular foreign policy issues without taking seriously the background to them. So, James Jones, an American religious psychologist and academic of comparative religion, notes in his informative study, Blood that Cries Out from the Earth, that liberal democracies based on the values of individual rights and government by negotiation and compromise have not yet begun to find a way to respond to those who are convinced that God has given them the single master plan for how society should be organised and governed. That view is held widely across the world.
	That understanding of the divine mandate is shared by Christian reconstructionists in America, by Muslim jihadi around the world, by ultra-orthodox Jews in Israel and by groups such as the Japanese Buddhist group Aum Shinrikyo and the Hindu nationalist party India. I agree with and stress James Jones's analysis that whether such a divine mission can coexist with liberal democracy remains one of the major religious and political issues of the beginning of the 21st century.
	I suggest that policymakers need to pay far greater attention to this than they have done hitherto. All too often, foreign policymakers here in Europe and in America display a propensity to rely on the advice of social scientists who employ rational choice models or game theory in attempts to comprehend sacred values that are deeply held for non-instrumental reasons. I do not think that it takes a bishop to recognise that such sacred values are not open to the instrumental calculus of statistically based social sciences.
	It is not my intention here to rehearse the well established thesis that religion is among the missing dimensions of statecraft. Rather, it is to suggest that meeting many of the foreign challenges of the present and the future will depend on a better understanding of how religion and politics are mixed together in our world. Counterterrorism policies that appeal to the self-interest of religiously motivated terrorists are unlikely to succeed. Threatening Iran with a further tightening of sanctions is unlikely to succeed when the regime's description of the US as the "great Satan" is to do not with the religious foundation of America, but far more with its materialist values.
	We stand little chance of winning the battle of ideas if we speak all the time of United Nations resolutions, unilateralism, multilateralism, weapons inspectors, coercion and non-coercion. We need a new language and a new vision for dealing with this battle of ideas, and that remains one of the most pressing foreign policy challengers for our Government and for our generation.

Lord Anderson of Swansea: My Lords, I respectfully agree that we ignore the religious dimension in our foreign policy formulation and objectives at our peril. Like previous speakers, I congratulate the noble Lord, Lord Marlesford, on providing such an excellent platform for the debate. My only criticism is that, so far as I recall, the only mention of the European Union was as a potential threat to our Diplomatic Service, and I follow rather more the speech of the noble Lord, Lord Wallace of Saltaire, who invites us to follow the advice of the Oracle at Delphi to know ourselves and our capacities, and perhaps the words of Robert Burns:
	"to see ourselves as others see us"—
	not as some nostalgic sepia-tinted vision of the past.
	The noble Lord invited us to examine the new challenges which face us in foreign policy. In my judgment, to appreciate those challenges we need to understand the context in which we are likely to operate over the next 10 and 20 years and the instruments available to us and our allies. However, first, there should be a word of caution about predictions. The joy of forecasting is that it is very fallible; by contrast, hindsight gives us 20:20 vision, and a look back over the past 20 years would show, first, that 20 years ago the Berlin Wall was still there and many would not have forecast its fall. Since then, there has been not only the fall of the Soviet Union, but many of its empire's former members and even parts of the former Soviet Union are now in the European Union and NATO.
	Again, 10 years ago there were rather naïve assumptions that Russia would be just like us and become a western-style democracy. Since then, an amendment has been moved, as we say, that although Russia is part of the Council of Europe, we saw the new and more aggressive style under Putin from about 2003-04. Again, eight years ago, we had not had the World Trade Centre bombing; 9/11 coloured the world perceptions of the threat of Islamic fundamentalism and the US self-perception as being invulnerable on its own territory—hence, the "war on terror", the "axis of evil" and the distortion which followed in US foreign policy which, I hope, will be modified under President Obama. Perhaps the last of those elements which would give the forecasters a certain humility is what happened in the past year or two in respect of the bursting of the bubble in the world financial system, whether that started from Lehman Brothers or, even earlier, sub-prime mortgages, and the effect that the crisis is likely to have not only on western capitalism— which was affected alone, perhaps, in the 1930s' depression—but the whole world.
	That was a word of caution. With due hesitation, I ask: what challenges are likely to face us as we proceed during the next five, 10 or 20 years? There appears to be reasonable consensus among the forecasters and the thinktankers. This is hardly surprising, because these people swim in the same goldfish bowl and advise the same groups. For example, the excellent report by the United States National Intelligence Council, published last November, Global Trends, drew very heavily on the think tanks in Europe and around the world; it is as though they were the same people who advised the European Union on strategy or who wrote the French white paper on defence.
	The NIC reports certain relative certainties and certain key uncertainties. Its analysis of trends, and hence challenges, which other forecasts, as I said, replicate, talks of the rise of India and China by 2025; of the relative power of non-state actors; of the shift in relative wealth and world power from West to East, and of the US becoming less dominant and a first among equals. It talks of continued economic growth—with a question mark—putting pressure on energy, food and water, and about the increasing potential for conflict. The key uncertainties are energy security, the effect of climate change, whether mercantilism protectionism will stage a comeback, the effect of a nuclear-armed Iran, and whether stability can be achieved in the greater Middle East.
	The European security strategy that I mentioned, published last autumn, follows that same trend, as does the excellent French white paper on defence. I looked for a similar UK paper; the nearest I found was the FCO White Paper on UK international priorities that was published three years ago in March 2006. The 2003 White Paper promised us that the Government had committed themselves to a review every two years, to ensure that foreign policy remained relevant and kept up with the pace of change. Well, three years have passed, and it would be helpful to learn from my noble friend when we might have that FCO contribution.
	In this consensus, we will clearly have a changed context. Perhaps the major omission is the insufficient emphasis given to world population and its effects on conflicts. I think, for example, of the Rwanda genocide: was it 800,000 or a million people killed in that bloodbath between March and June 1994? That was essentially a conflict over land between the Hutu and the Tutsi. The problems in Kenya two years ago between the Luo and other tribes were, again, largely about population and land. In only 80 years, the Kenyan population has gone from 2.9 million to 37 million. On the violence in Gaza, in 1950 its population was 240,000: it is now 1.5 million and will soon move to 2.2 million. With that sort of increase, how can one seek to provide education and health for those young people, and prevent them becoming so radicalised? Something can yet be done. The Arab populations in the West Bank and in Israel proper do not have that same population boom.
	If the challenges have been identified, what sort of instruments do we have? It has been mentioned that, globally, the United Nations and, indeed, the whole post-Second World War institutional framework needs to be examined—and I pay tribute here to the work of the noble Lord, Lord Hannay, and his colleagues on the high-level panel, about which relatively little has been done since—as does, clearly, the regional level of western organisations. NATO is now 60 years old and needs a new strategic concept. For the UK, I concede that the initiative of President Medvedev at Evian on the new European security architecture fits ill with the Georgia invasion, but should not be dismissed out of hand.
	The particular challenge for us is to balance our links with the United States, our closest bilateral relationship, with membership of the European Union. Pace the Daily Mail, the US ambassador to NATO recently said that,
	"the US needs, the UK needs, NATO needs, the democratic world needs a stronger, more capable European defence capacity. An ESDP with only soft power is not enough".
	Yesterday, I was at Northwood and saw the first naval EU operation, Atalanta. It was under the command of a British admiral, which is light-years away from that suspicion of the EU one hears so often from the other side.
	I shall end on this note. I recently met a member of Kadima in Israel. She was sitting alongside Mr Netanyahu, their likely next Prime Minister, and told him that it had taken four years for her party to reach that point of recognition which Israel had to reach on an accommodation with a two-state solution. If the Opposition get into power, will we have to wait a similar time for recognition of the fact that the European Union is our key partner, that we share the same broad objectives over most of the ground and that, day-to-day, we are reaching common positions with our European partners over world issues? That is the reality if we seek to know ourselves, and to move realistically to the future.

Lord McNally: My Lords, I have moved seamlessly from the Front Bench, because I do not want to disturb the protocol of the House when we have two excellent Front-Bench speakers. It is also a fact that, although I spent the first 10 years of my working life deeply involved in foreign policy, first as international secretary of the Labour Party and then as political secretary to Lord Callaghan, this is my first speech in a foreign affairs debate. I have occasionally dipped into European matters, but I hope that the House will treat me with its gentleness for a maiden speaker in this respect—not least because I find myself sandwiched between the noble Lords, Lord Anderson and Lord Hurd, two acknowledged experts in this field.
	First, the introduction to the debate by the noble Lord, Lord Marlesford, was absolutely masterful. I agreed with almost every word; I suspect that we will both spend the early morning tomorrow thinking about where one or other of us has got it wrong. Seriously, it was a tremendous speech, spoiled a little by his over-confidence in Mr Hague. I want more than one judiciously selected quote from the noble Lord, Lord Howell, to convince me that Mr Hague is not a better biographer or after-dinner speaker than he would a Foreign Secretary make, but we will see. We were certainly greatly helped in setting the tone for this debate by that opening from the noble Lord, Lord Marlesford.
	As to predictions, the noble Lord, Lord Anderson, gave us a good gypsy's warning. I remember 20 years ago discussing the future of Germany at a think-tank gathering in Berlin. We had just concluded that German unity was a 21st-century matter, when discussions were interrupted to tell us that the East Germans had opened Check-point Charlie and that we should all get in a taxi to go down and look at that move. As Harold Macmillan warned us many years ago, "Events, dear boy, events" can sometimes upset even the best futurology.
	Some contributions will be useful because they will give us an idea of where the political parties want to take us on foreign policy. As my noble friend Lord Wallace said, the New Statesmantold us recently that Mr Miliband is working on a post-Blair foreign policy. As has already been said, if that means an end to the love affair with some of the wilder shores of American neo-conservatism on foreign policy objectives, it is greatly to be welcomed.
	Even more, I look forward to the speech of the noble Lord, Lord Howell. If we are, as opinion polls suggest, within 15 months of a Conservative Government, the country is entitled to know how the Conservatives will square the circle between the assurances frequently given in this House by the noble and learned Lord, Lord Howe, and the noble Lord, Lord Howell, about their commitment to Europe, and the whole tone and body language of the Conservative approach to Europe. Last week, when I saw Mr Brown, Chancellor Merkel and President Sarkozy together in Berlin, I wondered what kind of gathering that would have been if a Conservative Prime Minister had been there, safely armed with a victory based on hostility to Europe.
	I say that with some experience. In 1974, I was adviser to a Labour Government who entered office committed to European policy crafted in response to short-term party-political needs. I worry that the Conservative Party will do exactly the same and be a disruptive force in Europe just when every bit of evidence and advice we get from friends around the world concerns the need for Europe to pull together and to be a proper partner. We frequently hear about expectations of the Obama Administration, but the message loud and clear from that Administration is the need for a united European partnership to meet the global challenge that we face.
	Recently, I went to a meeting of the All-Party China Group that a Chinese Minister attended. He gave the strong message that the visit of Secretary of State Clinton had been extremely successful and that China and America thought that they had the basis for co-operation in the face of the economic challenges facing the world. Speaking from the Chinese point of view, the Minister wanted a European partner in and a European dimension to that effort to join America and China. The noble Baroness, Lady Amos, will know about that from her experience.
	The noble Lord, Lord Howell, often prays in aid the Commonwealth. I am as strong a Commonwealth supporter as anyone, but if you talk to representatives of any Commonwealth country, they want to know these days not what Britain will do for them, but what Britain can influence Europe to do to meet their needs. I look forward to hearing the contribution from the noble Lord, Lord Howell.
	Perhaps I may say one more thing about the contribution of the noble and learned Lord, Lord Howe. I went to a presentation on Hong Kong the other day. It was only when I heard how the Hong Kong settlement was working in practice that I realised just what a triumph it was for his diplomacy. We now have in Hong Kong a world city that is prospering free, very much thanks to his effort. Although there will be many claims for his successes in his career, Hong Kong will be high on that list.
	As for my party, we are secure on the ground to which the right reverend Prelate referred. As liberal democracies, we must hold firm to some good, old-fashioned values. Torturing people is wrong. It is a measure of how far we have not come that 70 years ago, the bombing of a single Spanish town, Guernica, could provoke a masterpiece and world outrage, yet today, we can contemplate "shock and awe" as an instrument of war and look on Gaza as part of the Middle East tragedy.
	This country has great opportunities. I visited Syria as part of an IPU delegation. The Foreign Secretary has already been there. There are opportunities to involve Syria in the Middle East peace process. That should be continued. I have one other worry, which again brings us back to our European commitment. I worry about the fragility of east European democracies. If we are to hold them in the democratic family, they will need help and assistance from Europe.
	As always, this House contributes great wisdom. I hope that part of the Minister's duties after this debate will be to send a copy of Hansard to the Foreign Secretary.

Lord Hurd of Westwell: My Lords, I join in thanking my noble friend, not just for making possible and launching this debate but for the shrewd and elegant way in which he covered the ground. It was extraordinarily skilful.
	I am tempted to follow the noble Lord, Lord McNally, because his worries about a future meeting—perhaps in the quite near future—between Chancellor Merkel, President Sarkozy and my right honourable friend who is now the leader of the Opposition are bizarre. Those happen to be two people with whom I know that my right honourable friend has close and happy dealings a great deal of the time, so the noble Lord can rest assured that his nightmare will not take place, but I shall not pre-empt what my noble friend Lord Howell may say when he winds up.
	I want to deal with just one aspect, which is the instrument of foreign policy; namely, the Foreign Office and mainly the Foreign Office at home. I have a personal interest. It is just over 56 years since, my bowler hat in hand, I tiptoed into the Foreign Office for the first time as a humble Third Secretary. Most of my working life—not all of it, but most of it—has in some way or other been concerned with the Foreign Office. I am proud of that association and I know that the Foreign Service today is full of men and women of integrity and high talent. I believe that it continues to provide an attractive and valuable career.
	That is all the more reason why we should notice and take account of what I believe is a malaise becoming increasingly apparent in its working. I base that not on statistics or surveys but on a steady accumulation of anecdotal evidence from friends, acquaintances and strangers, varied in content but almost unanimous in its thrust. That thrust is that the Foreign Office in London—which is what I am mainly talking about—is ceasing to be a storehouse of knowledge providing valued advice to Ministers and is increasingly an office of management, management of a steadily shrinking overseas service. It is management applying at the request of the Treasury the latest techniques of modern administration: targets, frameworks, mission statements, public service agreements, departmental strategic objectives, and so forth.
	I am not qualified to rubbish those techniques and I am certain that they have their place, but method should be the servant, not the master of policy. I have been doing some research for a book. In the 19th century, the Foreign Office was essentially a management office, a tiny one. In that century, policy was for many years gripped by two amazing Foreign Secretaries, Lord Palmerston and Lord Salisbury, who liked to pretend aristocratic ignorance of detail but in fact worked hard and long, treating their officials as clerks and their senior officials as super-clerks—that was a phrase of the time. Lord Salisbury passed on and the officials became powerful national figures: Crowe, Arthur Nicholson and later Vansittart were well-known names. Perhaps that went too far, but I worry now that the Foreign Office in London may be reverting, despite the talent deployed there, to an age of super-clerks, rather than policy advisors who have time to think and to bring weight to bear through their advice to Ministers. This is all in the name of financial discipline and economy and, of course, money is important—money is tight and money will probably get tighter. I am not sure that we set about allocating it in the right way.
	When I was Foreign Secretary, I tried to get our overseas efforts looked at as one—I refer to defence, Foreign Office, aid, British Council, overseas services of the BBC. We made some painful progress, but certainly not enough. The present distribution of resources in our overseas effort weighs heavily against the Foreign Office in an age when diplomacy is more widespread and, I believe, more important than ever. Of course, the balance needs to shift—it needs to take account of changes in the world. Much— perhaps most—EU business is now done either in Brussels or between national departments, and that is right. It is natural, though, to me, strange, that Her Majesty's ambassador in Kabul, Her Majesty's ambassador in Beijing and the high commissioner in Delhi, now have bigger staffs and carry more weight than our ambassadors in Rome and Berlin; I do not complain at all about those necessary shifts.
	We should be aware, however, that shifts and balances are one thing, but the squeeze on the service is undeniable. The House of Commons Select Committee, in what I thought was a very moderate report, talked about the serious risk of overstretch—a net reduction of 400 staff planned over the next five years. It is sad to me and to others—perhaps to most noble Lords present—to see the closure of posts, many of which we have known, and to see our representation, in Latin America and Africa in particular, slip. I am not sure that the choices here are always wise.
	I shall give a very small example—life is composed of small examples. If I were a Treasury official crouched over my computer, looking at the facts and figures, I might well decide it was not necessary to have a high commissioner in Swaziland, as has been decided. That Treasury official would not, however, know that the relationship between the King of Swaziland and the British high commissioner was traditionally very close and important—that relationship cannot be reproduced by the high commissioner in Pretoria, or by an aid official in Swaziland.
	That brings me to a point, which has already been touched upon, about our aid programme. It is very good news that the Government have been able to increase that programme substantially. My worry is not about the size of the programme but about the growing feeling that the efforts of DfID bear less and less relation to the foreign policy of this country. It seems to be a different exercise with different priorities. I believe that we need to look at the working of the 2002 Act. There is nothing wrong with specifying the reduction of poverty as the basis and the focus of the aid programme. I will not now go into the question of ministerial responsibility, because that is a controversy in its own right, but I point out that it is perfectly possible to have a separate Cabinet Minister for aid without having a separate department increasingly diverging, in my view, from the foreign policy of this country. I do not believe that the 2002 Act was designed as a decree of divorce between our aid programme and our foreign policy. I think that that needs to be scrutinised.
	My main concern—this is a narrow point, but, I believe, an important one—is that the Foreign Office in London has been hollowed out. I believe that it should, once again, consist of and produce a reserve of knowledge that can put advice from overseas posts in a strategic context, hold its own in arguments with the Prime Minister and with No. 10. This, again, is a matter that we could debate separately. The Prime Minister is absolutely entitled to feel sure that the foreign policy that he and his colleagues have worked out is being consistently and efficiently applied. In return, however, the Foreign Office should be equipped to remind the Prime Minister, from time to time, that the world is not exactly as he or she wishes it to be and to put certain restraints on the natural and proper enthusiasms, or, as Keynes said, "animal spirits", that you find coming out of No. 10. Not all the knowledge needs to be home-grown. One of my regrets as Foreign Secretary is that I did not, in the rush of events, give enough time and attention to the huge body of information and insight from outside Whitehall, outside the foreign service, in the think-tanks, in the universities and so on. This has increased in recent years and I am not convinced so far that the Foreign Office, and the Secretary of State in particular, borrow sufficiently from it.
	Diplomacy used to be quite narrow in scope. It used to be about frontiers, colonies and dynasties. Now it is about almost everything under the sun, including the sun, climate change, trade and finance, and energy security—almost every human activity now requires, in a globalised world, intercourse between nation states, which cling to their authority. Not all of this should be done by the Foreign Office, of course not, but the Foreign Office should be, as far as Britain is concerned, the co-ordinator, the guide and the shepherd. I think it is very important, in this baffling world, that it should keep and, where necessary, repair and restore its tradition of excellence.

Lord Bramall: My Lords, I, too, congratulate the noble Lord, Lord Marlesford, on obtaining and introducing, so interestingly and ably, this debate on the challenges to our foreign policy at a very crucial time. Among many other concerns and, indeed, opportunities for our foreign policy, surely the most urgent challenge at this moment must be the establishment of a more rational, fully joined-up foreign, defence and aid policy to help lead to a greater stability in the Middle East and south- west Asia, where the Arab-Israel confrontation and the Kashmir dispute are still key and core issues.
	To have any hope of success, any new policy can only be developed in conjunction with the new American Administration, with this country as a valued and supportive friend, but one who is not afraid to offer our own views and experience, and as much as possible in conjunction with our fellow European partners. We cannot simply go on charging into military commitments without due consideration of what they will entail, and I am afraid that there is plenty of evidence of that with this Government. Then, when original raisons d'être are shown to have no substance, or when all the difficulties that should have been anticipated become a reality, we not only produce excuses and new reasons for what we have embarked upon but actually start to pursue these, rather self-satisfyingly, as the new aims of operations, however difficult they may be to achieve. For instance, anyone who, having read history, believes that Afghanistan, of all countries, can have a tidy, lasting, western-style democracy imposed from above or from outside, needs his head examined. As the great Duke of Wellington once said, 200 years ago:
	"I always had a horror of revolutionising any country from outside for political object ... if they rise up themselves, well and good, but to stir them up is a fearful responsibility."
	That still stands.
	It is not so much the British Army that has lost its way in Afghanistan, as a recent, rather sad article in the Economist tried to make out, as that it has never had a consistent and navigable politico-strategic way to follow in the first place and certainly not one in keeping with the resources allotted to it. It would, therefore, not be surprising if commanders on the ground are sometimes a bit perplexed as to the best tactics to follow at any given time. The Army and the Royal Marines, magnificently supported by the Royal Air Force, have undoubtedly done their very best, under the most wretchedly difficult circumstances; they have shown remarkable dedication, motivation and courage and are paying a high cost in terms of lives and wounds. Indeed, only yesterday, my parent regiment, the Rifles, very sadly lost another three riflemen. They have also had tactical successes, inflicting many casualties on the Taliban, which must have weakened the opposition. All that reflects great credit on the professionalism, leadership and esprit de corps of our forces. However, as they know, and as many in your Lordships' House know, they have not got as far in changing the hearts, minds and attitudes of the inhabitants of Helmand province as they would have liked, and as indeed is so necessary for any real stability in the area. They have also had some serious problems with their lines of communication and supplies through Pakistan.
	So if we—NATO, because this, perhaps surprisingly, has been accepted as a NATO commitment—are to make any real progress in Afghanistan, and there can be no question, for a number of compelling reasons, of this country pulling out in the foreseeable future, we will need a new coherent strategy and a political and economic programme to help to put that into effect. In bringing this about, there must be no complacency; otherwise, the situation could very seriously deteriorate.
	I hope that the experienced and forceful Richard Holbrooke, sent by President Obama to make an up-to-date appraisal of the overall situation, will be able to extend his remit to include recommendations for a more regional policy. Now that the Iranian President has opened the door to dialogue just a chink, it may not be too fanciful to hope that this, too, could contribute to more stability in the area. A new strategy will certainly need as close co-operation with Pakistan as it is possible to get, and that in itself will require careful, skilled and subtle diplomacy of the highest order in view of Pakistan's very difficult position. So much diplomacy is required but there are so few resources for it at the moment.
	We must certainly deliver aid more quickly and effectively than at present. Although I have longer-term reservations about the infusion of more troops, in the short term more troops from somewhere may well be required to give the inhabitants in the south and Helmand province proper and not fleeting protection. We must try, by one means or another, to separate from among those opposing us the more moderates from the Holy War and Arabic extremists, who still have to be dealt with not only by inducements but also with the help of meaningful negotiations, as has happened in that area in times gone by.
	It is no good going on slavishly and oversimplistically equating the Taliban with al-Qaeda. Here again, a study of the history of the area will show how wide of the mark that is likely to be, for al-Qaeda looks outwards and internationally, while the Taliban is essentially home-grown and inward-looking, with its inherent Afghan hatred of foreign occupation. Nor, of course, must one become obsessed with the idea so often put forward that a permanently "tamed" and even occupied Afghanistan is the only way to counter, and ultimately defeat, the international terrorist threat to us and to other countries. That is nonsense.
	What is now required is for the policy elements of the Foreign and Commonwealth Office—the noble Lord, Lord Hurd, put this so much better than I could possibly do—with the invaluable advice, no doubt, of the much respected Sir Sherard Cowper-Coles, who may have sensibly been brought in to match the wider responsibilities of Richard Holbrooke and the Ministry of Defence, and with the Chiefs of Staff and their advisers, no longer to wait, as occurred under the previous regime, for No. 10 to tell them what to do but to get together, with links with their contacts in the new American Administration and with the overall American commander, and to put forward practicable options to Ministers. Those options, with the resources to carry them through, will have a chance of bringing to that unhappy area just enough stability to enable us before too long, and having disrupted al-Qaeda considerably, as we have already, to hand over any military responsibilities to the indigenous people with our heads held high.

Lord King of Bridgwater: My Lords, I join in congratulating the noble Lord, Lord Marlesford, not only, as many other noble Lords have said, on taking on the responsibility of opening this most interesting debate but on the way in which he introduced it. I take particular pleasure in the fact that I am following the noble and gallant Lord, Lord Bramall, as will be apparent from certain remarks that I shall make in support of some of what he said.
	This debate refers to the new challenges in foreign policy. Of course, we see these against the background of a dangerous and destabilised world. It was already in that condition, and seriously so, before the arrival of the economic crunch, which is yet to have its impact in any significant way on many corners of the world and which I think will certainly make conditions in some countries immensely more difficult than they are even at the moment.
	One of the most obvious examples of a destabilised area is the Middle East. I am sure that many others will wish to comment about the situation there. With regard to Israel, I am struck that at the moment when Mr Netanyahu, who might be seen as the more extreme candidate, is about to become the leader of Israel, Mr George Mitchell is arriving as a possible negotiator or conciliator. With his experience of bringing together the extremes in Northern Ireland, perhaps there is just a glimmer of hope there, although I cannot see that it will be more than that. However, if there is no one to outflank the parties, then, if there is any sense left, there is perhaps just a possibility of recognising that at last there must be a better understanding and a chance of achieving a settlement. Certainly, it seems that the Israel/Palestine situation has been deteriorating and not improving.
	I wish to turn particularly to the area that the noble and gallant Lord, Lord Bramall, talked about. He rightly paid tribute, as I wish to do, to the extraordinary courage, dedication and professionalism of our Armed Forces, and he referred to the deaths of members of the Rifles. I am a much more junior member of the regiment which he so signally graced in his time, but I recall that the regiment that I had the honour to serve, which now makes up the Rifles, had as its cap badge the battle honour "Jellalabad 1840" as the clearest possible reminder of the world in which we move. As the noble and learned Lord, Lord Bramall, said, people who do not know the history of Afghanistan do not deserve to play any part in determining policy hereafter.
	I say that against the background of what I believe to be the much more serious situation that has now emerged—that is, what many have suggested is the virtual disappearance of the Durand line. Now, there is almost no border between Pakistan and Afghanistan, and people are now talking about the development of "Paktunistan". Into this present terrible cocktail—we know that agreement was recently reached by the Pakistan army—is added the fact that in the Pashtun and Baluch areas there is now virtually no rule of government law. Policy is directed as though we are dealing with Governments who have sovereign power over all the territories that are currently defined as their borders, but that makes the situation for our forces in Helmand much graver and more difficult. I do not wish to be too apocalyptic about it but I have heard the leaders of both Pakistan and Afghanistan described as being in a sense more like the lord mayors of their capital cities than rulers with power and responsibility over the whole of their countries. That makes the situation extremely challenging.
	It is against that background that the noble and gallant Lord, Lord Bramall, referred to the "dislike of the invader" and foreign occupation. We know about the Russian situation. Some of us will remember or know somebody who lives on in a senior position. Bob Gates was, in an earlier incarnation, head of the CIA. In his memoir, which he published in 1996, he referred to the final departure of the Russians, saying that at last Afghanistan was free of the foreign invader. Now the new Secretary for Defence in the Obama Administration, Bob Gates has to face up to exactly the challenge that he previously recognised in the difficult position of the Russians at that time.
	I pick up on the point made by the noble and gallant Lord, Lord Bramall, about al-Qaeda. I wonder to what extent this is still an al-Qaeda problem, and whether al-Qaeda is, in some ways, marginalised. How will the situation develop in Helmand province and the border areas of Pakistan, where al-Qaeda is seen, in a sense, as a foreign invader? It seems to me that that is what happened in Iraq. In the end, the Iraqis decided that they did not want al-Qaeda's presence and activities, as they had in the past. Against this background, I look to see what approaches we can make. Above all, this needs an international approach. We certainly need a co-operative approach from Russia, or we could face serious problems as to how we supply our forces in Afghanistan, in view of recent developments in Pakistan. Russia, China, Iran and India have a keen interest in the stability of the area and must undoubtedly be seriously worried about the challenges that are now developing.
	Against that background, I certainly welcome the constructive approach of President Obama. I hope that it will lead to constructive discussions with each of the countries concerned. I hope that there will be constructive discussions with Iran; there are areas in which we are able to have very helpful and constructive relations. I recall the number of serving members of the Iranian Army who lost their lives in trying to prevent drug traffic out of Afghanistan and Pakistan, through Iran and into Europe. China, which now faces the gravest of economic problems, has a keen interest in greater stability, and surely India cannot look with anything but the greatest apprehension at the risk of major instability in its nuclear-armed neighbour.
	I hope that the plea that has come from so many speakers today will be heard. As a former Secretary of State for Defence, I am well aware of the importance of "jaw, jaw" and the role of the Foreign Office, exactly as my noble friend Lord Hurd, with whom I had the honour and privilege of working on many occasions, said. I always saw those of us in Defence as being very much at the service of the Foreign Office, with military might and the iron fist available very much as second-best. The leadership of the Foreign Office and our effective foreign policy was much the best way forward.
	The tragedy is that defence has not been a powerful ally in support of an effective foreign policy. The tragedy of recent years is that events in Iraq and Afghanistan have underlined the limitations of military power and, in that way, undermined the effectiveness of the position that we can adopt in our foreign policy and the influence that we could bring to bear. We are undermined by recent events and the limitations that have been shown on military power. Undoubtedly, the economic situation of this country also means that substantial improvement in the funding of our Armed Forces and defence will be extremely difficult. That will also pose considerable limitations on what we are able to do to tackle those situations. Against that background, maximum international co-operation will be essential for our country if we are to make any progress in the difficult and dangerous challenges that we will face in the future.

Lord Wright of Richmond: My Lords, this is a particularly appropriate moment to consider new challenges in foreign policy. Perhaps the most challenging and, I hope, encouraging, is the opportunity presented by a new President of the United States and the extent to which Her Majesty's Government and our European partners can respond to that opportunity by supporting the apparent readiness of President Obama to depart from what one commentator has described as,
	"the breathtaking incompetence of the Bush administration".
	It is incompetence with which British Ministers, over the past eight years, have too readily associated themselves, without much benefit to British or international interests. I propose today to touch briefly on the two subjects of dialogue and diplomacy, both of which have been touched on by several noble Lords, most particularly by the noble Lord, Lord Marlesford, in that remarkable introduction to the debate.
	As to dialogue, I have spoken often—too often, many may think—in this House about the need to be ready, as we have in the past, to talk to those with whom we disagree, whether they are so-called terrorists or unfriendly regimes. In that context, I draw the attention of the House to a remarkable letter in today's Timesabout the need to talk to Hamas, signed by—among others—the noble Lord, Lord Patten of Barnes, the noble Lord, Lord Ashdown, and, most remarkably, a former Foreign Minister of Israel. I will not pursue that subject, which, as I say, I have talked about very often in this House.
	I hope that we can support and encourage President Obama in his proclaimed readiness to enter into contact with Iran, a contact that President Ahmadinejad has welcomed, provided Iran is treated with due respect. This proviso is hardly surprising when we recall that President Khatami's readiness to talk and the outpouring of sympathy from the Iranian population after 9/11 were greeted by President Bush's decision to brand Iran as part of the axis of evil. It remains to be seen how the Iranians react to the appointment of Dennis Ross as President Obama's special adviser on the Gulf. The press has already cast some doubt on the wisdom of that appointment.
	As for diplomacy, many in this House have deplored the repeated failure of the Bush Administration to make adequate use of their highly experienced professional diplomats. Apart from the fact that the United States system still provides for a large number of embassies to be offered as a reward for political or financial support, the top hamper of the State Department itself still suffers a virtual renewal with every change of Administration.
	The noble Lord, Lord Hurd, spoke eloquently about the dangers of reducing our Diplomatic Service. As a postscript, I add that the noble Lord has spoken too modestly about his failure to take external expertise sufficiently into account. I remember well two remarkable seminars on Germany and the Soviet Union, which the noble Lord arranged as Foreign Secretary and in which a significant group of academics played a very large role.
	It will not surprise your Lordships if, as a former head of the Diplomatic Service—I do not know whether I should also describe myself as a "lively exhibit"—I urge Ministers to continue to support our professional service. It is a service which, as I know well and as others have said, has been the envy, and I suspect still is the envy, of many other countries. International relations is about more than giving aid. I do not grudge the financial support, indeed munificence, made available to the Department for International Development, but I believe it is time to correct what has become a serious imbalance between aid and diplomacy. We have in our Diplomatic Service a unique resource for pursuing and promoting our national and international interests, not only in our bilateral relationships which still need constant attention even in this age of globalisation and instant communication, but also in the leading role our diplomats play in a wide variety of international institutions, whether it be the European Union, the United Nations or the Commonwealth.
	Perhaps I may pick up one point made by both the noble and gallant Lord, Lord Bramall, and the noble Lord, Lord King, about relationships between the Foreign and Commonwealth Office and the Ministry of Defence. I should like to take a rather belated opportunity to thank the noble and gallant Lord for the way in which he paid considerable attention to that relationship when he was Chief of the Defence Staff and I was Permanent Under-Secretary in the Foreign Office. Indeed, it was largely at his instigation that we instituted regular lunches between the chiefs of staff and the senior Foreign Office board, and it is fair to say that I hope that the initiative has been followed by his successors and indeed by my successors. I should like to thank him for that.
	I hope that when the Minister comes to reply, he will feel able to confirm the Government's continuing commitment to a global foreign policy and a readiness to provide adequate resources to enable Her Majesty's Diplomatic Service to fulfil that commitment. Finally, I regard it as a real privilege to have taken part in a quite exceptional debate, and I echo the hope of the noble Lord, Lord McNally—I mean this seriously—that the Minister will draw the Hansard account of this debate to the attention of both the Secretary of State for Foreign and Commonwealth Affairs and the Secretary of State for Defence.

Baroness Gibson of Market Rasen: My Lords, I, too, thank the noble Lord, Lord Marlesford, for this debate. I wish to take this opportunity to raise the profile of Latin America, where there are plenty of challenges relating to foreign policy. As chair of the All-Party Parliamentary British-Latin American Group, I will take this opportunity to ensure that such an important part of the world is not forgotten. Unfortunately, the ambassadors to the UK from the Latin American countries feel that their countries have been placed somewhat on the back-burner in recent years. Inevitably, with fighting in Afghanistan and Iraq, the events in Gaza and the Middle East more generally, Latin America is not exactly on the front pages of our newspapers or on our television screens. Moreover, it does not help us with our Latin American friends when we close our embassies in their countries, thus signalling as far as they are concerned the lessening of their importance, to say nothing of the added workload for those of our ambassadors who are out in the field, flying the flag on our behalf. In my view, closing embassies has been a retrograde step, which, as a country, we may well yet come to deeply regret.
	Latin America, as I am sure my noble friend knows well, could provide business and investment opportunities for UK companies which may be curtailed in other parts of the world. Certainly Brazil stands out as a country wide open with opportunities for UK businesses, as the Brazilian ambassador always emphasises. Perhaps my noble friend can give his assessment of how the UK is investing in Latin America, especially in Brazil, and what the Government are doing to encourage such investment. I emphasise UK investment because at the last annual general meeting of the all-party group we had in attendance 18 ambassadors from Latin American countries both large and small. Investment was high on all their agendas, together with at that time questions surrounding changes in our migration rules and the restrictions that these were placing on citizens from Latin American countries. I understand that aspects of the latter are still under discussion with the Government. The former remains vital to both the UK and our friends in Latin America.
	I turn now to a specific Latin American country. I have just returned from Bolivia, where I was part of a delegation to La Paz and Santa Cruz organised by the Inter-Parliamentary Union. This organisation, headed so ably by Kenneth Courtenay, is invaluable in furthering relationships between the UK and different countries across the world. Since taking over as chair of the all-party group, I have been in the fortunate position of seeing this work at close quarters and admiring the expertise and dedication of Ken and his colleagues. Our visit to Bolivia was no exception. We met the Bolivian vice-president, the presidents of both the Chamber of Deputies and the Senate, the Foreign Minister, the president of the new human rights commission and the ombudsman. We also met with NGOs and representatives of indigenous people from different parts of the country.
	The politicians took an early opportunity to raise an important issue for them and, in turn, I shall raise it today. They expressed their deep concern about the UK Government's recent decision to require Bolivian citizens wishing to visit the UK to have a visa to enter this country. The Bolivian Government emphasised that Bolivians travelling here are neither delinquents nor criminals, but in Bolivian eyes they are being treated as such. The Bolivian Government want to know why Bolivia and Venezuela have been singled out over visas when other Latin American countries have not had such a requirement placed on them. Perhaps my noble friend could explain to the House the Government's thinking behind the visa decision.
	It was an interesting and exciting time to be visiting Bolivia, which is the poorest and least developed of all the Latin American countries. Some 64 per cent of the population live below the poverty line; this figure rises to 80 per cent in the rural areas. President Evo Morales was first elected to power in January 2006. His manifesto included enhancing the social welfare of the majority of Bolivians, especially children and the elderly; enhancing the political rights of those Bolivians who are of indigenous descent and who have long been excluded from decision-making processes; and entering into new relationships with the main foreign companies and increasing their tax contributions, particularly from gas resources. As the indigenous people are in the majority in Bolivia, the measures affecting them are particularly popular.
	President Morales himself is the first indigenous Bolivian president, having been elected to a five-year term of office. In August 2008, he won a recall referendum with 67 per cent of the vote and, on 25 January this year, he called a further referendum on the text of a new constitution. Participation in this was over 90 per cent and international observers confirmed that it was conducted freely and fairly. The "yes" option won by over 61 per cent of the valid votes counted. The number of politicians now in favour of the constitution stands at 73 per cent because the opposition parties have split and 12 per cent of those opposition politicians have pledged to support the Government in their aims for constitutional change. Of course the implementation of the constitution will not be plain sailing and opposition will undoubtedly continue, especially from Podemos, the main opposition party. However, once the genie is out of the lamp, things can never be quite the same again. The hopes and aspirations of those who never before felt that they counted have been raised beyond their wildest dreams. As the vice-president put it:
	"There has been a recognition by the indigenous people that they can now be anything they want to be".
	The Morales Government will have to move as swiftly as they are able to enact their promises because of these high expectations.
	A key issue for the UK is the position of BG Bolivia and other oil and gas producers in Bolivia and what the Morales Government describe as,
	"entering into new relationships with the main foreign companies"—
	in other words, renegotiating existing contracts. Last Wednesday, we visited the gas plant of BG Bolivia, La Vertiente, in the Tarija district. The plant has been nationalised by the Government, which means that the Bolivian state now owns 51 per cent of it. The Bolivian Government have established a new national company whose duty is to oversee gas extraction. However, we were told that there are not enough people employed to carry out this task properly, which hampers negotiations and creates frustrations. A great deal of suspicion in Bolivia about foreigners involved in the extraction industries has built up over the years. Against this background, some members of the delegation, including me, feared the worst when it came to discussing the renegotiation of the contract between the Bolivian Government and BG Bolivia. However, in our briefing we were told that in the last four months there has been "a lot of progress" and that they are,
	"almost at a stage of final agreement".
	President Morales has met personally with BG Bolivia representatives on a number of occasions and asked for a further meeting in the near future. It is to be hoped that this is a positive position from which a new and positive relationship can develop. Perhaps the Minister can comment on this.
	In the time available, it has been possible to give only a flavour of Bolivia in its new phase, but I know that your Lordships will wish for the good bilateral relationships that we have with Bolivia and all Latin American countries to continue.

Lord Chidgey: My Lords, I, too, am grateful to the noble Lord, Lord Marlesford, for securing this debate and giving me the opportunity to talk about foreign policy challenges in the Great Lakes region of Africa, following on from the overview provided by the noble Baroness, Lady Amos. I want to refer, in particular, to recent developments discussed in Uganda in meetings with government Ministers, opposition party leaders and local MPs during parliamentary workshops held in Kampala last week. I record our gratitude to the Prime Minister of Uganda, Professor Apolo Nsibambi, the Foreign Affairs Minister, Oryem Henry Okello, Dr Latigo, the leader of the Opposition in the Ugandan Parliament, and many senior parliamentarians for the detailed briefing that they gave us during our short visit.
	Noble Lords will know of my interests in strengthening democracy in the region in my role as the vice-chairman of the Africa All-Party Parliamentary Group and as a council member for the UK Parliament with AWEPA. As a member of the FCO and the CPA parliamentary delegation to Uganda, I was made particularly aware of the progress of DfID-partnered multidonor projects, such as Deepening Democracy, and of AWEPA plans for providing parliamentary support in Uganda.
	The reason for concentrating on Uganda is that it is the centre of a region that has for decades suffered fraudulent elections, tyranny, civil wars, rebellion, terrorism, mass torture, genocide, forced migration and the creation of millions of refugees and internally displaced persons. Not one of the region's states, which include the Sudan, the Democratic Republic of the Congo, Rwanda, Burundi, Tanzania, Kenya and Uganda, has remained unscathed in that time. Yet it is self-evident that the success or failure of developing democratic, transparent and accountable governance will determine the stability of that region and thus of a major part of the African continent. We know that securing that success presents a major policy challenge to the nation states, the regional political institutions and the major donor nations, in particular the United Kingdom. To the west and north of the region, in the DRC and in southern Sudan, the situation remains grimly volatile. In Kenya to the east, the violence that followed the recent elections generated uncertainty and instability. In the heart of the region lies Uganda, a country that suffered 40 years of coups, dictatorships and guerrilla war, resulting in 1 million Ugandans killed, 500,000 seriously injured and 2 million uprooted as refugees.
	Your Lordships will be aware that for more than two decades the rebel Lord's Resistance Army has terrorised great swathes of the Congo, southern Sudan and Uganda. The conflict in northern Uganda is one of the longest running and most brutal in Africa, with thousands of children abducted to become child soldiers and more than 1 million internally displaced people in refugee camps. Peace talks between the Government and the LRA broke down last year when the LRA's leader, Joseph Kony, refused to sign for fear of an International Criminal Court warrant issued against him. This ran contrary to previous statements made by the LRA that its members would be willing to face trial. With the ICC's chief prosecutor, Luis Moreno-Ocampo, insisting on Kony's arrest, it seems unlikely that the indictment will be dropped. The LRA has resumed attacks on communities along the DRC-Sudan border, with reports of horrific violence, atrocities and the abduction of over 150 children to be recruited into the LRA's ranks. As many as 50,000 people are thought to have been displaced in the affected areas.
	In mid-December, Uganda, the DRC and southern Sudan launched a combined military offensive on LRA positions. Although this initiative, named Operation Lightning Thunder, is now recognised not to have quite lived up to its name, it is nevertheless thought to have splintered the LRA forces into several groups totalling at most a few hundred. In any event, at present Uganda has an agreement that its armed forces' actions in the Congo may continue until the LRA leadership is captured or killed, effectively destroying the rebels as a force. It now seems probable that the remnants of the LRA are trapped in the north-eastern corner of the DRC and are likely to surrender.
	Ugandan government Ministers, however, have made it clear that such is the trauma suffered by their people in the impoverished northern region of Uganda that normality will not be achieved until the threat of the return of Kony and his cronies is finally removed. Government Ministers stressed to us their determination that Kony and his second and third in command, Okot Odhiambo and Dominic Ongwen, should first be put on trial in a court constructed for that purpose in Uganda. Only then would they be handed over to the International Criminal Court to face any charges of war crimes. Can the Minister in his response or later tell your Lordships' House whether Her Majesty's Government think that there is adequate scope in the Ugandan domestic justice system to try LRA fighters and commanders and thus suspend the ICC indictments? Do Her Majesty's Government feel that they can do anything to ensure that the process is seen and demonstrated to be credible?
	What steps are our Government considering with the Ugandan Government to facilitate more defections from the LRA's ranks and to support those who have defected as part of an embassy programme? What measures are Her Majesty's Government taking to support the Governments of the region in their efforts to find and arrest Joseph Kony? What actions are our Government proposing to ensure that adequate protection and assistance is given to those civilians affected, or terrorised, by recent LRA attacks? What is the Government's response to the concerns that the UN force in the DRC does not have sufficient capacity to protect civilians at risk of attack in the northern DRC?
	Our discussions in Kampala with Ugandan parliamentarians showed that there is a real fear that the LRA will be able to return to northern Uganda itself. If Kony were able to send even a few elements of his forces back to that area for just a short period, this would be hugely destabilising for the ongoing process. Such a scenario will not have been lost on Kony.
	The Prime Minister of Uganda, Professor Apolo Nsibambi, is responsible for planning a $600 million reconstruction budget with international donors. This programme is needed to resettle the north once Kony's rebels are finally defeated. The challenge is the hundreds of thousands of internally displaced persons still in the camps in the north, of which some 20 per cent are orphaned children, disabled adults or elderly infirm, who will be very hard to resettle.
	While the turmoil in the DRC continues to threaten progress, by meeting the major humanitarian challenges of resettling refugees, rebuilding schools and clinics, and by stimulating local markets and the economy, Uganda could well become a bastion of stability in an otherwise turbulent region. The challenge for Her Majesty's Government is to ensure that the United Kingdom support programme continues to nurture and strengthen the institutions fundamental to democratic development. Can the Minister confirm that the Government are, for example, committed to the Deepening Democracy programme and other parliamentary support programmes in the longer term?
	Uganda holds a pivotal role in the United Kingdom's interests in this region and Ugandan parliamentarians hold the closest ties to Britain. Uganda currently holds an African Union seat on the UN Security Council. With the recently confirmed oilfields in Lake Albert expected to enter initial production next year, the Ugandan economy could be transformed.
	In the mean time, it is clear from meetings and discussions in Kampala that there is a cross-party determination among Uganda's parliamentarians to strengthen their Parliament and a multiparty democratic structure to support it. This fact is demonstrated by well over 100 MPs attending the UK-funded two-day workshop organised by our high commission in Kampala. Full credit must be given to our high commissioner, Martin Shearman, to his deputy, Jason Grimes, and to Isabel Turner for their extraordinary efforts in providing a catalyst for Ugandan parliamentarians of all parties to work together in addressing the challenges faced by their region.

The Earl of Sandwich: My Lords, I, too, thank the noble Lord, Lord Marlesford, especially for his excellent introduction. This is a timely debate because, in his own metaphor, we are riding a new wave of foreign policy and have entered the Obama-Clinton era of international relations.
	It seems the spirit of Robin Cook is abroad again and I believe that the Government are rightly rethinking, or have the chance to rethink, their policies in the Middle East and south Asia. I hope that this will include a radical change in the way Britain and NATO have tried to protect reconstruction in Afghanistan. For some time, I have questioned whether military force has become an end in itself rather than a guarantor of national rights and freedoms.
	I am also persuaded that through mainly US influence, as in Iraq, the Afghan people have watched massive aid contracts benefiting the contractors more than the intended beneficiaries. The evidence is very strong on this and I warmly endorse what my noble friend Lady D'Souza said about the loss of capacity of centralised government, a deliberate policy mistake on a scale comparable to de-Baathification in Iraq. I hope the Minister will say something about the UK forging a new direction post-Blair in its diplomatic and development policies, with or without the United States. This could be signalled both at NATO and at the forthcoming G20 summit.
	I have heard our Armed Forces Ministers talk rather disparagingly about NATO members who prefer to keep away from the front line and I wonder whether anyone has had a chance to study the experience of the Hungarian provincial reconstruction team in Pul-i-Khumri, the capital of Baghlan province north of Kabul. There the Hungarians have been deliberately attempting to support local institutions and aid projects away from the front line but, because they were in uniform, their efforts were frustrated at every turn. The aid agencies have been saying for years that armies cannot do development except in emergencies. For this reason, I hope that Her Majesty's Government will design a new strategy which genuinely puts the Afghan people first. We have an enlarged embassy but I am not sure that we have a new strategy.
	Today I want to give an example of another important post-conflict country in south Asia which receives much less attention but where, on a smaller scale, we have a much better track record. I was in Nepal earlier this month with the noble Lord, Lord Sheikh, as members of an IPU delegation led by Sir John Stanley. We met the new Maoist Prime Minister, Prachanda, and several Ministers and MPs of all political parties. We wanted to know how successful they have been in moving from a destructive civil war to a new constitutional democracy. I am glad to say that they are progressing well, though it is still a struggle.
	The UK has been in the forefront of the UN-led peace process and has supported the consequent search for change through a new parliamentary system and for a way out of violence and poverty. We have been prepared to talk discreetly to the Maoists for some time, while our US allies still see them as terrorists and keep them on the wanted list. This is still paying dividends; the UK is held in high esteem and, through our embassy, DfID and other channels, has been associated with some of the best practice in power sharing and the drafting of the new constitution before May next year. I say to the noble and learned Lord, Lord Howe, the noble Lord, Lord Hurd, and my noble friend Lord Wright—none of whom are in their place—that in this sense much of the DfID budget that they are attacking is diplomacy. I hope I can send that message through the Conservative Front Bench before the wind-up of the debate.
	The image we have of Nepal is one of tranquillity, conjured up by the Himalayan peaks and the smile of the honest Gurkha. But that vision contrasts somewhat with the confusion of the political scene, a faltering economy still held up by militants in the labour force and violence in the Terai plain. The world recession has already cut the number of tourists and is now hitting at migrant workers returning from places like Dubai, whose remittances were a significant proportion of national income.
	The two armies remain in separate camps. The chances of the Nepal Army merging with the People's Liberation Army still seem quite remote, although there are moves to integrate the youngest group of Maoist soldiers as a priority. I know that our Government are supporting this. Both armies are jealous of their independence and the human rights agencies have attacked them both for their defence of impunity and for refusing to investigate disappearances and atrocities on both sides.
	One potentially brighter spot is the presence of an active media, which still enjoy a degree of independence, although they, too, have suffered from the killing of a prominent journalist and they have to exercise a degree of self-censorship.
	One nationwide programme which the UK has supported since the 1990s has been in forestry, which affects the lives of 40 per cent of the population. Specifically, DfID has supported thousands of community groups all over Nepal which are replanting and maintaining the forest while using it to provide fuel and fodder as they always have done. We visited one of these user groups in Baglung province, in the shadow of the Annapurna range. We found that they have plenty of ideas for the new constitution and, just like us, they were discussing climate change, alternative energy, more benefits for women and minorities, a healthier lifestyle, better economic opportunities and, of course, support for forestry.
	For the moment, these ideas chime in well with the new Maoist philosophy. They are now the mantra of political leaders and those who are drafting the new constitution. But they are still only aspirations and hard to turn into reality. It will be impossible to satisfy all the expectations of the people even in the present interim constitution. And yet Nepal is a good example of a post-conflict society and of which we should take note. It is capable of overcoming the mistakes of the past and also offers a good example of our foreign policy generally. I wish we could support other countries with the same blend of our experience and practical action.

Armed Forces: Detention
	 — 
	Statement

Lord Tunnicliffe: My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Private Ryan Wrathall, Marine Darren Smith and Lance Corporal Stephen Kingscott, who were killed in operations in Iraq and Afghanistan recently.
	With the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Defence Secretary. The Statement is as follows:
	"Madam Deputy Speaker, I wish to make a Statement on the results of a recent MoD review of records of detention resulting from security operations carried out by UK Armed Forces in Iraq and Afghanistan. It is essential that our Armed Forces are able to detain people who pose a real threat either to our troops, to those of our allies or to the local population we are seeking to protect. These operations are conducted by our forces with courage, integrity and professionalism.
	In undertaking these operations, we take fully into account our obligations under international law. In February last year, allegations were made that persons captured by UK forces in Iraq and transferred to US detention facilities were mistreated and removed unlawfully from Iraq. My predecessor rightly launched a review into these matters. Much of the work was led personally by a very senior serving British Army officer. My right honourable friend was right to satisfy himself that appropriate procedures were in place to ensure that persons captured by UK forces and transferred to US detention in Iraq were treated in accordance with UK policy and legal requirements. Separately, he also set in hand work to examine all available documentary material relating to detention operations in Iraq and Afghanistan, and to review the parliamentary record. The Ministry of Defence has now completed a detailed review of records of detention in Iraq and Afghanistan since the start of each campaign. I am placing in the Library details of all detentions in southern Iraq in each year since 2003.
	In Iraq, we have reviewed the record of detainee numbers, listing all individuals held in UK detention facilities, first at Shaibah logistics base and subsequently at the contingency operating base at Basra. In December 2003, when the facility at Shaibah was first opened, records show that 105 internees captured by UK forces were transferred into it from US custody at Camp Bucca, and a further 19 were released at this stage. After December 2003, an additional 546 individuals were interned in these facilities. The majority, 491, were released once it was judged that they no longer represented an imperative threat to security; 141 were transferred to the Iraqi authorities; a further 12 escaped; six were transferred to US detention facilities; and one sadly died in custody.
	In conducting this review, it became apparent that in three parliamentary Answers since February 2007, we overstated by approximately 1,000 the number of detainees held by UK forces in the period since January 2004. Nine further Answers contained minor inaccuracies. I have written separately to honourable Members setting the record straight, and have placed copies in the Library of the House. I apologise unreservedly for these inaccuracies.
	We have also reviewed our records of detentions in the period from March to December 2003, when large numbers of individuals were captured by UK forces during the initial high-intensity combat phase of the operation. Many of them were held for very short periods of time, or were transferred to the US facility at Umm Qasr and then released. This facility was run by the UK from late March to mid-April 2003, and was then transferred to US control. Given the circumstances in which the database was compiled, we cannot be confident that the data we hold are entirely complete. On a small number of occasions, answers or statements provided by my department have included figures relating to the position in 2003 that indicated that we initially held up to 5,000 Iraqi prisoners during this period. However, a significant number of these were held on behalf of other coalition forces. We now believe that UK forces transferred around 3,000 individuals to the detention facility at Umm Qasr between March and December 2003. However, I would ask the House to treat this figure as a best estimate.
	In areas outside Multinational Division (South East), UK forces have undertaken operations to capture individuals who were subsequently detained by the US. These individuals do not feature in the data that I set out above, and I do not intend to provide any further details on these detentions today. The review, however, concluded that UK forces have exercised appropriately their responsibilities towards all captured personnel handed to US custody, whether in MND (South East) or elsewhere, and uncovered no evidence of mistreatment.
	During the final stages of the review of records of detentions, we found information about one case relating to a security operation conducted in February 2004, a period that saw an increased level of insurgent activity as the transfer to Iraqi sovereignty drew closer. Two individuals were captured by UK forces in Iraq. They were transferred to US detention, in accordance with normal practice, and then moved subsequently to a detention facility in Afghanistan. This information was brought to my attention on 1 December 2008. I instructed officials to investigate this case thoroughly and quickly, so that I could bring a full account to Parliament. Following consultations with US authorities, we confirmed that they transferred these two individuals from Iraq to Afghanistan in 2004. They remain in US custody there.
	I regret that it is now clear that inaccurate information on this particular issue has been given to the House by my department. I must stress that this was based upon information available to Ministers and those who were briefing them at the time. I have written to the honourable Members concerned correcting the record, and I am placing a copy of these letters in the Library of the House. I want to apologise to the House for these errors.
	The individuals transferred to Afghanistan were members of Lashkar-e-Taiba, a proscribed organisation with links to al-Qaeda. The US Government have explained to us that they were moved to Afghanistan because of a lack of relevant linguists necessary to interrogate them effectively in Iraq. The US has categorised them as unlawful enemy combatants, and continues to review their status on a regular basis. We have been assured that the detainees are held in a humane, safe and secure environment meeting international standards consistent with cultural and religious norms. The ICRC has had regular access to the detainees. A due diligence search by US officials of the list of those individuals captured by UK forces and transferred to US detention facilities in Iraq confirmed that this was the only case in which individuals were subsequently transferred outside Iraq.
	This review has established that officials were aware of this transfer in 2004. It has also shown that references to this case were included in lengthy papers that went to the then Foreign Secretary and Home Secretary in April 2006. The particular significance of this case was not individually highlighted, or made sufficiently apparent at that point, to raise concern. My predecessors as Secretary of State for Defence have confirmed to me that they had no knowledge of these events.
	In retrospect, it is clear to me that Her Majesty's Government should have questioned the transfer to Afghanistan of these two individuals. We have discussed the issues surrounding this case with the US Government. They have reassured us about their treatment, but confirmed that, as they continue to represent significant security concerns, it is neither possible nor desirable to transfer them either to their country of detention or country of origin. The UK has no power to detain suspects in Iraq, and only limited powers of detention in Afghanistan.
	For Afghanistan, robust checks have confirmed that we have detailed and precise numbers of all those detained by UK forces since we deployed Task Force Helmand in July 2006. As of 31 December 2008, our database holds the capture details of 479 individuals, including 254 who were subsequently transferred to the authority of the Government of Afghanistan, 217 who were released, and eight who died as a result of injuries sustained on the battlefield.
	We hold capture details relating to a total of seven individuals detained by UK forces between 2001 and April 2006 and I believe that this represents a complete record. I am also placing the complete details of the detainee numbers for Afghanistan in the Library of the House.
	Our detention operations in Iraq and Afghanistan are underpinned by arrangements we have in place with our international partners. We have place a Memorandum of Understanding with the Government of Afghanistan, signed on 23 April 2006, covering the treatment of individuals detained by UK forces and transferred to Afghan custody. We have an MoU with Iraq, agreed on 8 November 2004, on the treatment of detainees transferred to Iraqi custody. Iraqi Interior, Justice and Defence Ministers have confirmed to us that Iraqi detention procedures remain consistent with the principles set out in that MoU.
	For the initial stages of the campaign in Iraq, we had in place an MoU with the US and Australia covering arrangements for the treatment and transfer of detainees. We worked on the mutual understanding that the key provisions of this MoU continued to apply until it was replaced last year by a further MoU with the US. We have also confirmed with the US that the provisions on arrangements for the treatment and transfer of captured persons remain under the new legal framework in Iraq, and that no person captured with assistance from UK forces will be removed from the territory of Iraq without prior consultation with the UK.
	I finish with this final observation. We ask our Armed Forces to operate in highly dangerous environments, where there is often a limit to the capacity of local agencies to enforce security and the rule of law. In those circumstances, it is essential that we provide our forces with the authority and capabilities to deal effectively with individuals who represent a serious threat to our troops or those they are there to protect; these two detainees fall into that category.
	We recognise the sensitivity of detention operations. We have put in place rigorous safeguards to ensure that detainees are treated properly. We will continue to carry out detention operations in accordance with our legal and policy obligations, in concert with the US and other allies. This is, and will remain, absolutely central to the way our Armed Forces conduct these vitally necessary operations".
	My Lords, that concludes the Statement.

Baroness Neville-Jones: My Lords, I join the Government in sending condolences from this House to the family and friends of those who have died in the service of their country.
	I thank the Minister for repeating the Statement. We on these Benches share the view that in the absence of local agencies with the capacity to enforce security and the rule of law, we must provide our Armed Forces with the authority and the capabilities to deal effectively with individuals who represent a serious threat to our troops and law-abiding citizens.
	Detention operations undertaken by our forces must, as the Minister made clear, be in accordance with our legal obligations and policy objectives. The Statement notes that we have various Memoranda of Understanding with international partners that underpin detention operations in Iraq and Afghanistan. What legal authority and force do the MoUs have? In 2005, the Intelligence and Security Committee published a report on the handling of detainees. One of the committee's recommendations was, in our view, important; it said that,
	"UK authorities should seek agreement with allies on the methods and standards for the detention, interviewing or interrogation of people detained in future operations".
	Are the Government satisfied that the MoUs that are now in place meet that recommendation?
	The Government's Statement corrects the parliamentary records relating to detention operations in Afghanistan and Iraq. Some serious errors in data capture were made by the Ministry of Defence, and I note the Government's apology for that. Why were the mistakes made? What procedural changes—this is the more important point—have been made to ensure that the MoD's future records of detention are accurate?
	Much of the Statement concerns the transfer of two members of Lashkar-e-Taiba to Afghanistan in 2004, following their capture by British forces and subsequent transfer to US forces. The account given to us today contradicts assurances given by the then Foreign Secretary in February 2006, that he was unaware of any transfers to US forces. We now know that officials were aware of these cases in 2004, and that they were referenced in papers sent to the Home Secretary and Foreign Secretary in 2006 before he delivered his assurances. It would be helpful to know why officials did not make Ministers aware of the error they had made in 2004 and why it has taken so long for the Government to correct themselves. What changes have been made to ensure that, in future cases where the Government should question the transfer of detainees, Ministers are made aware of the situation immediately?
	Although the Government have corrected mistakes in information already given to Parliament over the MoD's records of detention, I am concerned that the Government have not provided your Lordships' House with details on those individuals captured by UK forces in areas outside Multinational Division (South East) in Iraq. These were people who were subsequently detained by the United States. The Statement says that the Government,
	"do not intend to provide any further details"
	on the individuals who were captured outside that area and transferred to the US. Surely, though, that is to gloss over the main issue.
	Many in your Lordships' House will, I am sure, be aware of allegations by a former member of the SAS, Ben Griffin, that British forces were involved in operations to seize terror suspects to be handed over to American forces for extraordinary rendition. These alleged operations would have taken place outside Multinational Division (South East). Ben Griffin made a significant charge against the UK. Before he was injuncted by the Government, he said:
	"Throughout my time in Iraq I was in no doubt that individuals detained by UKSF"—
	UK special forces—
	"and handed over to our American colleagues would be tortured".
	He made allegations that they had witnessed brutal interrogations that involved the use of torture by such methods as drowning and the use of an electric cattle prod. These are serious allegations which the Government must be prepared to answer. Detail about official and ministerial oversight about two specific men is fine, but the Government must now complete the story. We do not have the necessary context and background information to put these allegations to rest. I am sure I speak for your Lordships' House when I say that we do not want Statement after Statement. The Government must make a clean breast of it rather than dribbling out the truth.
	Do the Government ever intend to publish data on persons captured outside MND (South East), which is the area we are talking about, and transferred to the US? If that is the Government's intention, when can your Lordships' House expect to receive the information? Why have the Government not published the actual review of the procedures the Armed Forces have in place to ensure that detention operations and transfers were, and are, in line with this country's legal obligations and policy objectives? A number of serious questions remain outstanding to which I hope the Minister will be able to provide answers.

Lord Lee of Trafford: My Lords, I enjoin these Benches in the earlier condolences.
	As far as we are concerned, this Statement is extremely unsatisfactory. It consists of five carefully crafted pages on which clearly the MoD has been working for weeks. It has been sprung on Parliament with no notice—a couple of hours' notice at the most—it is extremely detailed, it involves international law and human rights and it covers a number of corrections of answers that have been given to noble Lords and parliamentarians over the years. The whole issue and the way it has been handled warrant a full debate rather than this Statement.
	Reference is made in the Statement to a number of documents that have been placed in the Library—details of detentions in Iraq since 2003 and a number of the corrections to earlier answers. By 1 pm today, none of these was in the Library. I was unable to trace them. I finally managed to get one sheet of paper half an hour before this Statement was made. The sheet that I was shown and have here is quite interesting; it touches one of the points that the noble Baroness made earlier. It is headed "Summary of Individuals Detained by Conventional UK Forces in Iraq". I ask the Minister whether it covers those detained in Iraq by our special forces.
	The Statement says:
	"It is essential that our Armed Forces are able to detain people who pose a real threat either to our troops, to those of our allies or to the local population we are seeking to protect".
	I concur entirely with that. Does the Minister agree, however, that it is also essential that our forces operate to the highest standards, that proper records of detainees are kept and that the human rights of the detainee, international law and the Geneva Convention are properly adhered to? What confidence can we have in military records when the number of personnel detained since February 2007 was overstated by approximately 1,000?
	In the Al-Skeini case, details of which I have here, the House of Lords, in its judicial capacity, found that people detained by our forces in Iraq were under UK jurisdiction so UK law, including the Human Rights Act, applies to them. Torture is prohibited and the right to life is confirmed. How can one be satisfied that human rights are being upheld when the records themselves are so manifestly unsatisfactory? Sadly, we are reminded today of the Baha Mousa case—that unfortunate detainee was tortured and killed, and the MoD has now agreed to pay compensation.
	I would like to ask the Minister two specific questions. The first one was partly covered by the noble Baroness, Lady Neville-Jones, on the question of operations outside Multinational Division (South East). The Statement says:
	"I do not intend to provide any further details on these detentions today".
	Why not? Does the Secretary of State who made the original Statement actually have the details that he is not providing? When are they likely to be provided?
	The Statement refers to some detainees—those who are alleged to have links with al-Qaeda—being sent by the US from Iraq to Afghanistan for questioning,
	"because of a lack of relevant linguists necessary to interrogate them effectively in Iraq".
	Surely it would have been easier for a small number of linguists to be sent from Afghanistan to Iraq rather than the other way round—sending substantial numbers of detainees. Does not the UK have any linguists in Iraq whom the Americans could have called on without sending those detainees to Iraq?
	Today's Statement raises far more issues than it reassures. Sneaking it out—I use that word advisedly—without adequate notice, indeed without any notice, leaves a rather unpleasant taste and, frankly, fails to inspire confidence.
	Our troops have very difficult and dangerous roles to perform in Iraq and Afghanistan. We earlier heard about the very sad deaths. They conduct operations by and large with great bravery and professionalism but we owe it to them, to the civilian population and to the detainees themselves to keep proper records and to behave correctly at all times.

Lord Tunnicliffe: My Lords, referring first to the points made by the noble Baroness, I am pleased that there is an acceptance of the importance of the authority to make detention operations. We have agreements with our allies. They do not have the force of law but we have every confidence that they are effective and that they are being obeyed. We are in constant conversation with our allies on this and we believe the MOUs are being honoured.
	The procedural changes to allow an improvement in the records essentially involve the creation of a database in the United Kingdom at PJHQ where data from individual operations are collated. We believe that gives us an accurate picture of what is happening today and we believe that the scrutiny of the data that go back to the period in the Statement where we have given accurate figures is a good historical record. We recognise there was a period earlier in the campaigns when the records are poorer.
	We will not be providing details to the House of operations outside conventional operations. It is not our normal practice to give details of these sorts of operations and we have been consistent in that answer. The review is not being published because of the extent to which it contains classified information.
	I am sorry that the noble Lord, Lord Lee of Trafford, does not find the Statement complete. We believe that it is complete in the matters it addresses. I am sorry that the papers are not in our Library. I was reading the Statement as if I were the Secretary of State in another place and his assurance, which I was giving second-hand, was that they were in the House of Commons Library. I shall make sure that officials follow this up.
	As I said earlier, it is not our policy to reveal any details about operations of our special forces. However, our troops, be they special forces or regular forces, operate to the highest standards and obey international law. We are confident that, in our relationships with our allies, where individuals are apprehended by ourselves but handed over to the US authorities, the memorandum of understanding is honoured and that the standards under which they are detained are to the levels of international law. With regard to these individuals the International Committee of the Red Cross was able to give that kind of support.
	There is a series of questions which I shall loosely call "Who knew and when?" and which are entirely reasonable. It is clear from the record that UK officials at a certain level knew about the detention of the two individuals in the records. It is not clear why they did not raise it at a higher level. We have inspected the record: it is not clear. The US assures us—we have no reason not to accept its assurance—that its own systems failed in these two cases and did not make it clear that they had been captured by UK forces. Therefore, it did not ask us before they were transferred. It was learnt after they were transferred, but only by officials. It was not raised at a senior level until much later and, as I said earlier, there were references, although indirect, to documents which were available to the Home Secretary and the Foreign Secretary in 2006.
	In general, we are absolutely clear that, where our own forces are involved with other coalition partners, we shall not be complicit with torture or involved in any situation where we believe there will be torture. We have taken on board all the allegations made by the Special Forces individual, which have been repeated by both noble Lords. They have all been thoroughly investigated where he has provided evidence. My understanding is that there is limited evidence and that none of the allegations has been proven. If they were proven, we would of course take action. Our troops work to the highest standards. We are trying to create high standards; we are proud of how troops perform; and we believe that any limitations shown by our present procedures have been addressed.

Lord Hylton: My Lords, I welcome the fact that there has been a review and that the Statement mentioned access by the International Committee of the Red Cross. Does the Minister agree that that is always necessary if abuses are to be prevented in respect of detainees?
	I am more concerned with the present position than with what may have happened in the past. Does the Minister agree that many thousands of detainees are still being held by the United States authorities in Iraq and that those persons may be at risk of being transferred to other countries? Furthermore, is it not a fact that many other thousands are being held by the Government of Iraq without trial, despite the fact that some have been released under the Iraqi amnesty law? Will Her Majesty's Government press for the earliest possible release or trial of those people still held in Iraq? Is the Minister aware that several hundreds of detainees are being held by the United States in at least four locations in Afghanistan? There are rumours of a further detention centre in Djibouti in Africa, and of other people being held on various naval ships scattered around the world. Does the Minister agree that democracy cannot be defended properly by indefinite detention without trial?

Lord Tunnicliffe: My Lords, I agree that the International Committee of the Red Cross is an excellent and valuable organisation and should be involved in any areas of detention. On the holding of prisoners in Iraq by the US, the US has an agreement with the Iraqi Government as to its responsibilities in that area. In our own case, we have a Memorandum of Understanding with the Iraqis covering the treatment and handling of detainees. Iraq has committed to honouring its international legal responsibilities towards detainees. The Iraqi Interior, Justice and Defence Ministers have confirmed to us that Iraq's detention procedures maintain consistency with the principles set out in that MoU. Our support for our Iraqi partners continues on that basis.
	I am afraid that I cannot advise the House on numbers of individuals held by the US. I do not know of the various rumours that the noble Lord referred to; I do know that the new Administration have committed themselves to a thorough examination of detention as a result of these events. Of course, the United Kingdom Government are delighted that the US Administration are taking this open and thorough approach.

Baroness Ludford: My Lords, does not the Minister's previous comment make it even more necessary that, instead of this drip-feed of admissions after years of denials and what some of us would call cover-ups, the UK Government agree to an independent inquiry which can give a comprehensive overview of the sorry history of what appears to have been UK official complicity in torture and secret detention? Sooner or later, the truth will come out, probably out of Washington, and this partial information coming out on a Thursday afternoon will be seen to be deeply unsatisfactory.
	I bear the scars of Geoff Hoon making a complaint about me when, as vice-chair of the European Parliament's inquiry on extraordinary rendition, I led a delegation to London in October 2006. I made a press comment, and said:
	"Ministers and officials would be pressed on the extent to which intelligence and security personnel had been involved in the transport and interrogation of suspects in possible violation of the UK's human rights obligations".
	He said that I had prejudged the issue, since when we have heard David Miliband's admission about Diego Garcia being used for refuelling of rendition flights, we have heard a lot about Binyam Mohamed, and we have heard about the apparent collusion of MI5 in the abduction of Bisher al-Rawi and Jamil al-Banna. Would it not be better to grasp the nettle and get everything out into the public domain? As the noble Lord said, what the Minister is saying is the tip of the iceberg; there are thousands of detainees whose status is of concern and who appear to be in legal limbo. Will the Government agree sooner rather than later to get the whole story out so that we can really lance the boil?

Lord Tunnicliffe: My Lords, I am sorry that I can give no assurances to that effect. We have said categorically that the United Kingdom's forces are not involved in extraordinary rendition. In no way have we been involved in facilitating torture of detainees. We think that we have answered that question over and again and we do not intend to go any further in that area. We think that is entirely right that the ISC continues its interest in this matter; indeed, it held an inquiry on rendition and published a report. That report concluded that there was no evidence to suggest that the UK had been complicit in US extraordinary rendition operations. We believe that the ISC and its processes, and the extent to which the security services in this country are now liable to proper supervision and have to work to proper legal standards, put us in a very good position to deny the allegations.

Lord Ramsbotham: My Lords, remembering the extraordinary care which we were required to take, when I was serving in places such as Northern Ireland, to record the numbers of people who were detained, I am appalled that there is a discrepancy as large as 1,000 between the numbers of people who have been detained and the figures released. Is there more to come? Will the Minister assure the House that we will not hear of charges that may follow against members of Her Majesty's Armed Forces who have been involved in this detention process?

Lord Tunnicliffe: My Lords, I thank the noble Lord for his reminder about Northern Ireland, where, because of the length of the campaign, we ended up with a proper and accurate system of recording it. There is no question that, in Iraq, we ended up with multiple records and double counting. We have constructed an historically accurate database; the figures from that are in the Statement, and I will not repeat them.
	As to whether I believe that there are there further corrections to come out, the answer is no. I have been briefed on the thoroughness of this project and believe that the answers that have come out are right. However, I stress that this Statement is one of contrition; we have apologised to Parliament for not keeping the records accurately and have promised to change the procedures to ensure that they are, in future, accurate. The procedures, on which I have been briefed, are clearly different. We will have an accurate picture of any future detainees.
	In a sense, the noble Lord has asked me to prove a negative. There is nothing to suggest that any events will be revealed from future data, whereby individuals and the Armed Forces will be at some risk, because there is nothing to suggest that the data have any holes in them when it comes to transferring individuals to other custody. However, regarding how individuals were treated when they were apprehended and detained by the United Kingdom or, when under our various Memorandums of Understanding, handed over to the US, two individuals were treated, in a sense, outside of the terms of that Memorandum of Understanding. That is regrettable—it was an error and the Statement apologises for it.

Lord Elton: My Lords, what is implied by the term "unlawful enemies"—as opposed to "lawful enemies"—by which the United States categorises the two people we handed over to them? How does that distinction affect their treatment by the United States under United States law? That is something that we will need to know if we are to hand people over.

Lord Tunnicliffe: My Lords, it is fair to say that the categorisation is a US one, but not one that we recognise. It is important to seek and to be given reassurance about detainees' welfare and treatment and the safeguards and guarantees that the United States has put in place to prevent any repetition. The US has this categorisation and a process that results from it, of a six months' review of the risk represented by held individuals. It has reviewed, and regularly reviews, all held detainees to see whether they represent a serious danger. These individuals have fallen within that review process and are currently assessed as being an imperative danger. I cannot go much further on that point.

Lord Lester of Herne Hill: My Lords, I am in a minority in the Joint Committee on Human Rights in having supported the Government on the issue of Memoranda of Understanding. I have done so in the face of criticism by Amnesty International and Human Rights Watch; I have done so on the basis that the assurances contained in Memoranda of Understanding would be honoured and there would be independent monitoring to make sure that they were complied with.
	The Minister may not be aware that the Joint Committee on Human Rights is investigating some issues relating to what he has just said and has asked Ministers to appear in front of it. I do not want to say anything that would prejudice that. Will the Minister, in his mood of contrition, which is appreciated, at least tell the House that the Government will publish information, not about individual detainees and their treatment, but about the system? What instructions were in place? What safeguards were sought? What went wrong with that system? Above all, what is the new system in place that will give some assurance of proper safeguards against abuse? I ask that question because, when we debated the invasion of Iraq, I was the only Member of the House who raised issues about humanitarian and human rights' compliance rather than about the legality of the war. I am most dismayed by what I have heard today.

Lord Tunnicliffe: My Lords, the Memoranda of Understanding are crucially an assurance against abuse. People whom the UK transfers to US, Iraqi or indeed Afghan custody are transferred on the basis of commitments that they will not be abused, that they will be treated within international law, and that international law will be respected. That is a live issue between us and we continue to seek assurances about it. If the Government are able to say any more on that point, I will write to the noble Lord and place a record in the Library.
	What has gone wrong in the detail of this is not that people have been abused. We are confident that these individuals have not been abused. We are confident that they are in proper facilities and that the International Committee of the Red Cross has access to these individuals, therefore underwriting that confidence.

Lord Elton: My Lords, there is another question that troubles me slightly. The noble Lord said, making a perfectly respectable defence of his position, that we do not discuss the operations of Special Forces. Your Lordships do not want to hear about the operations of Special Forces, but about the treatment of the people who may have been captured by them. Will he tell us anything about that?

Lord Tunnicliffe: I will simply give the straightforward commitment that our forces are not involved in operations which would lead to the abuse of individuals captured by them in these joint operations. That is a commitment both for conventional and non-conventional operations. I cannot go into any more detail than that. All our operations are compatible with international law and our humanitarian obligations. That is an essential part of our policy. The reason for peacekeeping, and for being in Afghanistan and Iraq, is about those standards and our forces maintaining them. They are not complicit in any operations that offend those standards.

Lord Elton: My Lords, I accept the intention, but is inquiry being made about those individual cases or are the Government simply resting on the assumption that their standards are always adhered to?

Lord Tunnicliffe: My Lords, it would be more sensible at this point for me to examine the record and the detail of the noble Lord's question. If we can usefully add to it, we will write to him and place a copy in the Library.

Foreign Policy
	 — 
	Debate (Continued)

Lord Blaker: My Lords, I start by congratulating two people, one of whom was here a moment ago. I wanted to congratulate the noble Lord, Lord Marlesford, on choosing a topic for debate that has turned out to produce an excellent debate, which we still have not finished. I congratulate noble Lords still planning to speak on staying in the Chamber. The other person whom I wanted to congratulate is the noble Lord, Lord Hurd, who made remarks on the future of the Foreign Office and the Department for International Development with which I wholly agree and which I hope he will push further.
	It will not surprise noble Lords that I want to speak on Zimbabwe. It is far from clear whether the present transitional Government in that country will provide a workable basis on which to move forward from the current multiple crises of governance, human rights, disease and economic collapse. Mugabe is rejoicing in the fact that the situation is very complicated and gives him every opportunity to use his devious skills. The situation has also become sufficiently important for the most reverend Primates the Archbishops of York and Canterbury to enter the debate by urging people to pray for the future of Zimbabwe.
	I welcome the appointments of Morgan Tsvangirai as Prime Minister and of his MDC colleagues to ministerial office but, so far, all the signs are that their position seems to be best described by the phrase "in office but not in power". It has long been clear that real power in Zimbabwe is in the hands of the JOC, the Joint Operations Command. This is the junta comprising the chiefs of the army, air force, police, prisons and intelligence—five posts. Those are the people who really count. This is the junta that is effectively in control of the country. They continue to use abduction, beatings, arrest and detention as a means of intimidation and control. Corruption is rife and they use their power arbitrarily to seize property and other assets to accumulate wealth and power. Gideon Gono, the governor of the Reserve Bank, acts as their ally and banker.
	An African diplomat was recently quoted as saying:
	"The JOC is the real enemy of democracy. It obeys no laws and wants to send the signal that the MDC should not think that being in government offers it any sort of protection".
	It is significant that every member of this five-man cabal boycotted the swearing-in ceremonies for Tsvangirai and his new Ministers. They simply stayed away. Once its aim was to destroy the MDC as a political movement; now it is intent on bringing a swift end to Prime Minister Tsvangirai's power-sharing Government, or at least keeping it on a tight rein for as long as it can serve a useful purpose of window-dressing the regime to the world.
	Ironically, the body that ought to be monitoring and reporting back to SADC and the African Union on these breaches of the Global Political Agreement, which is the basis of this activity, is struggling to hold meetings because of a lack of money. JOMIC, the Joint Monitoring and Implementation Committee, was set up in January by SADC as a crucial element in the global agreement. Its role is defined as being,
	"to ensure the implementation, in letter and spirit, of the Global Political Agreement",
	to ensure "full implementation", to act as a conduit for complaints and to promote,
	"an atmosphere of mutual trust and understanding between the parties".
	JOMIC is supposed to be guaranteed by both SADC and the AU, yet Elton Mangoma, its co-chairman, says that it is barely able to function through lack of funds. That is one of the key organisations that is meant to hold the reins. It has no permanent office to hold meetings, no administrative staff and three of its 12 members have difficulty in attending meetings since not even their travel expenses can be covered.
	It is worrying that South Africa's foreign affairs spokesman is blithely able to announce that JOMIC is "up and running". This is an organisation that has no staff and practically no money. There seems to be a very dangerous complacency over much of the region that, now that the agreement has been signed and the swearing-in has taken place, they can sit back. Nothing could be further from the truth. What is needed is continuing and robust engagement.
	Mugabe has been driving a coach and horses through what was supposed to be a finely balanced and delicate concord between the parties. Months of careful and painful negotiation have been set aside and overridden by Mugabe appointing more Zanu-PF Ministers—that is, Ministers from his own party—than he was entitled to. This week he has ridden roughshod over the agreement again by unilaterally appointing permanent secretaries to the 31 ministries. That means 31 new permanent secretaries. Anything more ridiculous one cannot imagine.
	In response, Prime Minister Tsvangirai stated:
	"Yesterday's announcement of the appointment of Permanent Secretaries is in contravention of both the Global Political Agreement and the Constitution of Zimbabwe which is very clear with regard to Senior Government Appointments".
	Article 20.1.7 of the eighth schedule of the GPA states:
	"The Parties agree that with respect to occupants of senior Government Positions, such as Permanent Secretaries and Ambassadors, the leadership in Government, comprising the President, the Vice-Presidents, the Prime Minister and Deputy Prime Ministers, will consult and agree on such prior to their appointment".
	He also quoted the SADC communiqué issued in Pretoria on 27 January, which states that,
	"the appointments of the Reserve Bank Governor and the Attorney General will be dealt with by the Inclusive Government after its formation".
	I know that the Minister for Africa has maintained a close and detailed watch over all these issues. He is committed, as we all are, to the welfare of the people of Zimbabwe and the economic development of the region. It is vital that the EU-targeted measures against those who have brought death and destruction to Zimbabwe remain firmly in place. The very fact that Zanu-PF and its apologists in Africa call so vehemently for their repeal demonstrates that they are effective, particularly the hindrance to global gallivanting imposed by the prohibition on travel through the hub airports of Europe.
	The UK has provided massive humanitarian support over recent years. I am sure that this is appreciated by the vast majority of the people of Zimbabwe, even though it is treated with contempt by the Zanu-PF elite, who simply see it as another source of hard currency that they can raid. While I accept that this aid will have to continue simply to relieve suffering and save lives, I hope that so far as possible it will be channelled via agencies well protected from the greedy clutch of the Reserve Bank governor, Gideon Gono. I also hope that together with our EU partners we will be strict in releasing other funding only once it is clear from evidence on the ground that the very basic benchmarks of rule of law are observed, including press freedom and respect for human rights, as reiterated recently by the Foreign Secretary.
	Regional leaders must unequivocally support Prime Minister Tsvangirai's brave efforts to prove that a peaceful transition to democracy, good governance and economic stability is possible. Much more support should be forthcoming from members of SADC. For the second time in 30 years, Zimbabwe is a test case for democracy in southern Africa. The credibility of SADC and the AU are at stake. So are the lives of thousands of Zimbabweans.

Lord Ramsbotham: My Lords, I join all those who have congratulated the noble Lord, Lord Marlesford, on obtaining this debate, on his masterly and tone-setting opening speech and on including the word "challenge" in the title, which has allowed so many subjects to be considered in a debate in which, as my noble friend Lord Wright rightly said, it is a privilege to take part.
	As a fellow member of the Rifles, I join my noble and gallant friend Lord Bramall and the noble Lord, Lord King, in expressing condolences to the families of the three members of the regiment who lost their lives yesterday in Afghanistan.
	I should like to cover two totally different subjects: Trident and prisoners. I was flattered that both the noble Lord, Lord Marlesford, and the noble and learned Lord, Lord Howe, should quote from a letter that my noble and gallant friend Lord Bramall, General Sir Hugh Beach and I wrote to the Times earlier in the year on the subject of Trident replacement. We did that not to try to suggest precipitate unilateral disarmament but rather to encourage a debate about whether this weapon system, and the capability that it represents, is a vital part of securing national self-defence, or whether there is an alternative. Four questions have to be answered if that debate is to be held. While taking part in a debate on the World Service, I was disturbed to be told by a senior Member of the other place that such a debate was unnecessary because a vote in the House of Commons had already decreed that Trident should be replaced. I told that Member that that was not the point, as many wider issues had to be considered.
	Is Trident independent? The answer is strictly no, because the D-11 missile belongs to the United States. I have always thought it unthinkable that we should consider launching the Trident system without the backing and support of the United States. What is its current utility? Can we really see a weapon of this magnitude being used in wars or in an anti-terrorist situation? That is not to say, of course, that we do not have to consider threats that we cannot predict at the moment. It used to be said that possession of this weapon guaranteed you a seat at the top table. I do not believe that that applies anymore, because the place at the top table is now much more related to economics than to possession of a strategic nuclear deterrent.
	My final point—there are others—concerns affordability. There are two definitions of "affordability": can you afford it or can you afford to give up what you have to give up in order to afford it? As many noble Lords have said, the fact that our conventional arsenal is not equipped with all that we need to carry out what we have to do must raise questions about whether the cost of Trident is affordable in terms of what we cannot have because of it. The climate is right for such a debate. First, Trident has a limited shelf life. Secondly, President Obama has already announced where he is heading in this direction. An Australian-Japanese commission is examining the whole subject of multilateral disarmament. SALT and the nuclear proliferation treaties are coming up for renewal. Therefore, it seems to me that we would be wise to have a proper debate on this to make certain that all those taking part in the discussions are equipped with the relevant information.
	On costs, the letter that we wrote states that our independent deterrent has become virtually irrelevant except in the context of domestic politics. In that context, I wonder therefore whether the time has come to remove it from the defence budget so that it is no longer weighed against conventional forces in the examination of that budget, and either put into another budget, such as the Foreign Office's, or ring-fenced within the Ministry of Defence budget so that it is no longer an either/or with our required conventional force.
	On my second subject, the Foreign Office is closely connected with two groups of prisoners. One group comprises foreign national prisoners in prison in this country. Fourteen per cent of our current prison population comprises people from foreign countries; that is, 10,300 men and 960 women. They come from 160 nations. However, half of them come from 10 countries, which seem to be the main offenders, as it were. Most are involved with drugs. Four out of 10 men and eight out of 10 women in prison are there for drugs offences. Six out of the 10 are sentenced to more than four expensive years. One-fifth of all the women in prison are foreign nationals.
	In addition to that vast number of prison spaces being taken up by foreign nationals, the Prison Service requires 1,100 beds in our immigration hostels. A further 400 to 500 detainees are held in prisons while their deportation is processed after their sentence has been completed. I question whether the Foreign Office could not do more to help in this situation because, in a large number of cases, the deportation of foreign national criminals is written into the sentence.
	Slightly different rules apply to people coming from non-European countries. A non-European is given automatic deportation after a one-year sentence or an aggregation of a one-year sentence. If he commits a drug or gun offence, he is automatically deported, or the court can recommend deportation. If deportation is recommended by the court, why does that not occur so that, at the end of the sentence, the prisoner does not go to a detention centre, where they cause problems because they are not immigration detainees? Why are they not processed so that they go straight from prison to the airport and are then deported? One of the reasons is inefficient bureaucracy within the Prison Service. That is not a matter for the Foreign Office. However, what is a matter for the Foreign Office, which I believe should be pursued with greater vigour, is obtaining the deportation and the travel documents, sorting out all the international complications and making certain that the prisoner is deported. We have agreements on unilateral deportation with 69 countries. A European framework document will be issued in 2011, which will make deportation happen automatically for European national prisoners.
	I draw the following fact to the attention of the Foreign Office. Quite apart from the fact that prison is extremely expensive, it will not do its job of protecting the public unless it includes a period of resettlement to prepare people to live a useful and law-abiding life in their own country. Why, then, should not the Foreign Office make certain that our prisoners abroad are brought back in time to be resettled in this country before they go back to their community instead of arriving at the airport after their sentence with nothing—no benefits, no clothing, nothing? Without a charity called Prisoners Abroad, there they would be. Urgency by the Foreign Office could improve this. Similarly, urgency is needed to resettle foreign prisoners back in their own countries, rather than using up vast amounts of our money taking part—or not taking part—in programmes that have nothing to do with them, because they are not going to be resettled in this country.
	This is a challenge to the Foreign Office to which speed should be given, due to the fact that we have a hugely overcrowded and vastly expensive prison system in this country. If 14 per cent of prisoners could reduce the contribution to that, I recommend that the Foreign Office at least do something to help.

Lord Joffe: My Lords, I join in thanking the noble Lord, Lord Marlesford, for introducing this debate. I have listened with respect to the vast experience and views of the noble Lords, Lord Hurd and Lord Wright, on the conflicting foreign policies of the Foreign Office and DfID. I am not competent to express a view on that. However, addressing poverty in the developing world is a key part of our foreign policy. I declare a interest as an ex-chair of Oxfam and I am indebted to it for a briefing for this debate.
	The poor of the world are fortunate that our Prime Minister, who has led the way in the attack on poverty in the developing world, is also taking the lead in the forthcoming London G20 summit to broker a new global deal which will, I hope, benefit the developed and the developing worlds. I shall focus on what I believe the developing world hopes will emerge from the summit, which faces the challenge of responding to what is probably the world's most serious economic crisis since the 1930s.
	There is a real danger that the significant gains made towards meeting the millennium goals by many developing countries could be wiped out as financial flows dry up and, as usual, the most vulnerable will be most at risk. The severity of the crisis means that Governments around the world, led by the United Nations and the G20, need to act together to address it.
	In relation to the developing world, there are four key areas upon which the G20 should focus. These are delivering a rescue package for developing countries, tackling climate change, regulating finance to ensure stability and reforming global governance. These areas overlap to a certain extent with what is required by the G20 countries for their own economies.
	I shall briefly touch on each of these areas, beginning with a rescue package. It is hoped that a fiscal stimulus and resource for developing countries should be set up as soon as possible through the World Bank and the IMF, and it should be available on concessional terms, delivered as budget support and be free from conditionality. Rich countries must also increase their aid levels to reach the agreed target of 0.7 per cent of GDP, and debt cancellation must be actively pursued. Naturally, this will require significant additional funding, and it is important that it should not be taken out of existing ODA budgets, otherwise there will be no net benefit.
	In relation to climate change, without urgent action to curb greenhouse gas emissions, developing countries such as Bangladesh will be at great risk. It is hoped that the G20 rich countries will commit to delivering a fair share of adaptation finance to developing countries to help them avoid the worst impacts of climate change.
	In relation to finance and ensuring stability, the G20 must ensure that the world financial system is under greater public control and is more transparent and accountable. Tax havens, to which much of the wealth of the developing world is illicitly channelled, must be tackled. Measures should also be taken to curb volatility and speculation in financial markets, particularly exchange rate markets.
	Finally, there is a need to reform global governance. The crisis offers an opportunity to make the international system fit for the 21st century. This means having not only better regulation of financial flows, but more equitable governance and oversight at the international level, including the G20. The G20 includes the major developing economies, but excludes the least developed of them. It should be more inclusive and bring in broader representation. It was encouraging to learn, in the eloquent speech from the noble Baroness, Lady Amos, that NePAD and the African Union have been offered invitations to attend the London G20 summit. I hope that will continue in future.
	The London summit is an opportunity to mark an historic break with the failed system of unfettered capitalism, and the start of a new system that seeks to make the market work for the benefit of all people and for our planet. The challenge is for our Government, led by the Prime Minister, to help make that happen.

Baroness Hooper: My Lords, it feels quite like old times to be having a five-hour state-of-the-nation debate in your Lordships' House on a subject of extreme importance to our nation and to the whole world. I therefore add my thanks and congratulations to my noble friend Lord Marlesford on securing time for this debate, on his brilliant introduction and, indeed, on his timing. It is important, as the noble Lord, Lord McNally, reminded us earlier, that Conservative thinking and priorities on foreign policy are fully understood.
	Given the generous terms of the Motion, it is tempting to cover a lot of ground and touch on challenges such as the updating for the 21st century of our post-1945 global institutions, which the debate has not yet touched on. I refer to the changing role of the Council of Europe, with its 46 member states including Russia and Turkey—for 10 fascinating years, I served as a Member of the Parliamentary Assembly of the Council of Europe—and to the European Union, especially in this year of European parliamentary elections. There is also the challenge and excitement, in the United States, of what my noble friend described as the new wave of the Obama presidency.
	However, as many of your Lordships will not be surprised to hear, I intend in my allotted time to concentrate on two themes that are, I believe, all too often lost and forgotten in the drama and turbulence of the Middle East and in considering the overwhelming size and dynamism of growing economies such as India and China. I speak, first, of the rich and varied region of Latin America and, secondly, of the Commonwealth—an organisation of great importance to this country, and which I greatly admire.
	In all this, I wish to reiterate what has been said, today and on other occasions in your Lordships' House, about the importance of the role of the Foreign Office and of agencies such as the British Council—on which subject, I am disappointed that the noble Lord, Lord Kinnock, was not able to participate in this debate. I lament, once again, the closing and downsizing of embassies, high commissions and representative agencies, both in Latin America and in Commonwealth countries. My noble friend Lord Hurd has emphasised that, while I also lament the reduction in educational exchanges and scholarships that have traditionally played such an important role in our international relations and goodwill from countries worldwide.
	I must mention how magnificent a job the British branches of the Inter-Parliamentary Union and the Commonwealth Parliamentary Association do to fill the gap, as do many NGOs. I cite, for example, the English Speaking Union, but we must not forget the roles of Canning House, our Latin American organisation, and, indeed, of Chatham House. They deserve and need support, which I hope will be stepped up by a future Conservative Government. The noble Baroness, Lady Gibson, set the scene on Latin America in her role as chairman of the all-party group. She gave us facts and figures to underline the region's importance, and posed a number of questions that need answers. No doubt, the noble Viscount, Lord Montgomery, will also talk from his wide experience and knowledge of the region.
	The individual countries that together constitute what we, for convenience, refer to as Latin America play a vital part not only in the world economy but in other world aspects. They are rich in commodities, not only oil and gas but water and precious metals, and in food production. In the vital area of climate change, Amazonia is recognised and often described as the lungs of the world, and Brazil is a world leader in developing energy from sugar, one of the most efficient forms of alternative energy. China recognises that and is investing heavily in the region, replacing British investors in some cases. While we currently give priority to developing trade with China, as every other country in the world seems to be doing, China is replacing our investment and interest in Latin America.
	The European Union also recognises the importance of Latin America and has negotiated and continues to negotiate trade agreements with the region and with individual countries within it. In my day as president of Canning House, the Hispanic and Luso Brazilian Council, my aim was to build bridges between the European Union and Latin America. I saw one bridge going, obviously, from Spain and Portugal, from the south of Europe, and the other going from the north of Europe from the United Kingdom. Our historic and traditional links with individual countries through their independence movements, led by Bolivar, San Martín and O'Higgins, and our history of trade and investment in that region, have created an enormous amount of good will.
	To illustrate our neglect of Latin America, as a trustee of the Industry in Parliament Trust, I recently intended a seminar entitled "Global Markets: A Look Forward". The chairman of UK Trade and Investment's Financial Services Sector Advisory Board talked about its priority markets being the BRICs. He went on to talk about China, Russia, India and Singapore. The "B" of the BRICs acronym stands for Brazil, so I asked why Brazil, with its leading role in Latin America, its membership of the OECD, and so on, was not treated as a priority area. He answered that I would be glad to hear that it had indeed been a runner-up and almost included within the priority area.
	UK banks used to be household names throughout Latin America; now we probably see only HSBC there. Surely the balance needs redressing. For that matter, Mexico also has a huge and thriving economy and a Mexican is currently running the OECD. I very much welcome the state visit of the President of Mexico, which will help to call attention to the importance of that country. I hope that the Minister will be able to reassure us that in future, UK Trade and Investment priorities will include more than one country in Latin America.
	In the few moments that remain to me, I shall dwell on the Commonwealth. It is appropriate during the 60th anniversary year of the foundation of the Commonwealth to review an institution that has changed and developed over the years and now has countries with no historic or colonial links queuing up for membership. It includes and gives democratic voice to 53 countries large and small, including all the major faiths and spanning five continents and three oceans. Its importance was underlined recently by my right honourable friend William Hague—here I may help the noble Lord, Lord McNally, with his lack of confidence in him as a future Foreign Secretary. In a major speech my right honourable friend said:
	"The theme of my speech is the need to think afresh about Britain's relationship with the Commonwealth and to join with people from other nations in reinvigorating this extraordinary organisation. It is a relationship which has endured through the ages but sadly has been undervalued in recent years".
	That is the right approach and a good indication of Conservative policy for the future.
	It interesting to note the success of our Commonwealth at reinforcing the Francophone countries and the Spanish and Portuguese-speaking countries in creating and strengthening their links, both commercial and cultural, between peoples united by history and language. The example of the CPA in bringing parliamentarians together on that basis is also being followed. Maximum support is necessary from our Government to ensure that this unique institution moves forward and takes a lead in global policies.
	My final phrase will be: in facing new challenges, we must not forget old friends.

Lord Weidenfeld: My Lords, the predominant aim for a British foreign policy that can cope with political challenges, acute or simmering, and steer us through the floods of a global economic crisis in which there will probably be few Noah's Arks, must be a reinvigoration of our European policy and its harmonisation with renewed transatlantic ties. If your Lordships were to join me in looking further into the 21st century, you might share my view that such a broad alliance would be greatly strengthened by an additional dimension—that is, the inclusion of Russia. What should drive the nations living between Vancouver and Vladivostok together? It is, first, the ticking demographic time-bomb; the decline of population in Russia, but also in many European countries. By the middle of the century, Russia's 170 million of today may shrink to 120 million. In Europe's most populated state, Germany, the maternity wards are half empty; today's 85 million is likely to dwindle to 60 million. International terrorism and Islamic extremism also menace most of those countries. On the other hand, harmonious collaboration across the Atlantic, and including Russia, would make it easier to obtain equilibrium and a peaceful working relationship with China and the other giants of the East, rather than playing them off, one against the other.
	I am well aware that our relations with Russia are now at a low ebb, and it is not likely that one or the other party will beat its breast in remorse. But realistic reasoning does not mean appeasing. Reasoning does not mean appeasing. Those who go so far as to think that the present Russian regime has acted shamefully can be answered that the whole of the West gravely injured Russia's self-esteem after she rid herself of communism. Our media predicted early economic collapse, disintegration and the secession of major provinces led by powerful warlords. Western statesmen shook their fists in Kiev, denying Russia's special rights in the Crimea. Our backing of Georgia, doubtlessly inspired by humanist impulses, ignored the fact that the Government in Tblisi did not always handle their great neighbour judiciously and that the small Caucasian enclaves were yearning for freedom.
	Expanding the European Union further east, especially in the light of the fierce struggles to agree on the inner workings of the present 27-member Union, raises mighty problems. We should not allow ourselves to come to quick conclusions on, say, the Ukraine, when many of us have come to regret that we were perhaps prematurely sponsoring Turkey's entry some 20 years ago. I have recently been in the western Ukraine and, as a born Austrian, I felt the western, indeed Hapsburg, legacy in those places. At the same time, east Ukrainian friends still dream of the great moments in Russian history connected with Kiev, Odessa or Sebastopol. Of course, there is a modern, solid, vibrant Ukrainian nationalism, but if relations between the wider West and Russia were to develop along dynamically progressive lines, the phrase "partnership for peace", so popular in the early days of the Gorbachev and Yeltsin regimes in reference to NATO and the Russian armed forces, would become a reality and Ukraine, Belarus, Moldova and others in the "near-abroad" sphere might find that their security was no longer at risk.
	All nations of the wider Middle East, rich or needy, armed or practically defenceless, are now nervously trying to guess whether the superpower America under President Obama will be on the retreat into semi-isolation. Will America pursue the war on terror with the necessary vigour? Will America succeed in negotiating with allies, friends, fence-sitters and foes, or only waste precious time? Will contact with Iran, now that Teheran seems far nearer than expected to within sight of its first atomic bomb, lead to a successful compromise? If it does not, what will Obama do?
	There now seems to be a flurry among Middle Eastern regimes to seek shelter in a world in which the United States no longer plays the dominating role. They look for assurances elsewhere—to China, some to Russia—yet others seek to come to terms with terrorist organisations, upgrading them to valid interlocutors. Hostility to Israel is a safe posture in the quest for sympathy.
	Was the outburst by President Erdogan of Turkey at Davos, when storming from his shared platform with Shimon Peres, spontaneous or rehearsed? Will Turkey, hitherto a bastion of NATO loyalty and strategic partner with Israel, swap horses? One may well ask: would a Turkey of, say, 100 million people within 15 or 20 years carry the torch of western standards to Europe's new borders with Georgia, Armenia, Azerbaijan, Iran, Iraq and Syria, or would it turn into a Trojan horse, unloading a baggage of bigotry and intolerance?
	The more one considers the endless variations of the peace endeavours in the Palestinian/Israeli conflict, the more one feels that only a holistic approach can have positive results. What use would be an Israeli/Palestinian treaty which, before the ink was dry, was rendered ineffective by Iranian arms reaching, via Syria, Hezbollah in Lebanon on Israel's northern borders and Hamas in Gaza? In my view, only powerful international intervention would impress all parties and could deal effectively with the interlinking issues of that troubled area.
	America's new high-level talks in the region will have to convince the seasoned observer that a real breakthrough can be achieved by peaceful means. If it can, soft diplomacy will have brought us much solace as we grapple with our economic doldrums. If it cannot, will the wider West risk nuclear proliferation, anarchy, moral nihilism, state and non-state terrorism or will it, however reluctantly and only as a very last resort, follow a call to arms?

Baroness Falkner of Margravine: My Lords, I, too, thank the noble Lord, Lord Marlesford, for securing this debate and, indeed, for so elegantly and succinctly covering an expansive ground of challenges today.
	I want to talk about a single challenge, albeit an increasingly serious one: the question of what the West can do about Pakistan. It is an ongoing challenge in the sense that Pakistan's potential to destabilise the region continues, as the noble Lord, Lord King, and others pointed out, but it is also a growing challenge for us here in the UK, for the US and for NATO, as the outcome of what we can do in Afghanistan is predicated on what we are able to achieve in Pakistan. Furthermore, what happens in Pakistan is now inexorably tied up with debates in the wider Muslim world about justice for the people of Kashmir, which has taken its place alongside the challenge of seeking a peaceful solution to the Israel/Palestine problem.
	These debates impact on us in the domestic sphere here in Britain too, as both conflicts have an ability, at best, to engage British Muslims in our foreign policy decisions or, looking at the darker scenario, to radicalise British Muslims. What is clear is that foreign policy challenges are no longer the preserve of the initiated in forums such as this Chamber or the world of think-tankers and opinion-writers. We heard earlier of the need for a serious explanation by the Government to the British people of the limitations of Britain's role, not in any sense in "talking it down" but more in educational terms of how we are constrained by external factors and actors, and how we can no longer act on the will of the people in the international arena as we might have done 100 years ago.
	So where are we in Pakistan? Sixty years on from a messy partition from India, and after several attempts at military and civilian Governments, this country of 165 million is still incredibly poor. GDP per capita, based on purchasing power parity, is still under $2,500, and all the indicators of human development, basic health and education give no cause for optimism. The figure of per capita GDP is important. There is now consensus that transitions to democracy are unlikely to succeed in countries where GDP per capita is under around $7,000 per year. This is simply because institutional development and governance in those situations is so weak, and therefore human development is constrained, that democratic choice becomes challenging to deliver.
	Last week, 18 February saw a full year since democratic government was restored in Pakistan. It is ironic that this anniversary was marked by the virtual ceding of a critical region of Pakistan in one of its most volatile provinces, the North West Frontier Province, to the Taliban. It is an area where, in last year's election, the people overwhelmingly voted for the Awami National Party, which is a secular party far removed from Islamic militancy. It is testimony to the weakness of the democratic mandate that the Government of Pakistan have so easily succumbed to the terrorist threat. I use the word "terrorism" with care. It is indeed terrorism that the people of Swat have endured, with public beheadings of their friends and neighbours, and public beatings for those who do not subscribe to the antediluvian and medieval code that the Taliban impose. The deal itself is done by terrorists named by the Pakistan Government as the murderers of Benazir Bhutto.
	The danger of the Talibanisation of Pakistan does not end in the NWFP. Only a few weeks ago the Financial Times reported that the mayor of Karachi, who runs Pakistan's most liberal commercial centre of 15 million people, has spoken of his fear that the Taliban are taking over and destabilising his city. Last month nearly 20 people died in gun battles between people from the NWFP and local residents of Karachi. Lest noble Lords think that these are isolated instances, they will also recall that Lashkar-e-Taiba, the group behind the Mumbai bombings, is based in the Punjab. Last year alone saw 60 terrorist attacks in Pakistan. Those who hope that the Pakistani Taliban can be contained in fractious feudal outposts need to wake up to the sad fact that terrorism is endemic throughout Pakistan, and is increasingly destabilising the already weak governance structures.
	Furthermore, this region of south Asia is one where we have repeatedly heard the drums of war, even in the last decade. The stand-off between India and Pakistan over the Siachen glacier in 1999 led to a near-conflagration and has seen the longest land-mined border in the world, extending over 1,000 miles. Last December's Mumbai attacks resulted in sufficiently belligerent tones between the two countries for several Army divisions to be moved from Pakistan's western frontier, where they had been countering al-Qaeda, to its eastern border with India. The stakes in a future war with nuclear options would be disastrous not only for the region, but the world.
	What are we to do? The answer mainly lies in Washington, but it impacts on us here in London, too. Several of the pointers are fairly obvious. It seems evident that our tenure in Afghanistan will be for the long term, until that country becomes a relatively stable democracy, with a Government who are capable of enforcing law and order throughout their territory and maintaining peace and security for their citizens. My view is that this cannot be a Taliban Government. It must be democratically elected, even if this might be a hybrid of local customs and institutions alongside a popular mandate. The commitment of a further 17,000 troops from the US is a welcome development and I hope that the UK will rise to the challenge of augmenting our own force numbers there. In time, it will also be necessary to revisit the border between Afghanistan and Pakistan, and seek a solution to the Durand line dispute. It is only when both countries take responsibility for rooting out cross-border insurgency that sustained good relations between them will become possible.
	In terms of Washington's role in the region, I take the point made by several noble Lords that the Obama Administration may well find themselves preoccupied with the economic crisis, but we should be assured by the fact that some of the finest US minds have been brought to bear in the White House policy review on Afghanistan and Pakistan that is currently under way. Ambassador Holbrook brings both wisdom and experience to his diplomacy in the region, while the appointment of Bruce Riedel as chair of the review is extremely good news, as he will bring his background in the CIA, the Pentagon and the National Security Council to bear on what he describes as a situation which is "dim and dismal".
	While there is a recognition in the US of how dire the situation is in Pakistan and Afghanistan, I fear there is little original thinking in the Foreign Office of what we are to do or, indeed, of the urgency of the situation. At a modest level, we need to recognise that stability in Pakistan and Afghanistan is predicated on assistance with development. I share the view of several other noble Lords that the separation of DfID from the FCO has resulted in our losing strategic depth in prioritising our interests. Aid to Pakistan is now so low as to have little traction. A few months ago we were told that it was going up by £150 million a year in the 2008-11 settlement, an increase from a low base that works out at roughly £1 per year per capita for a county the size of Pakistan. We also need to improve the capability of Pakistan's military and security structures to deal with counter-insurgency. If this means providing training in arms to an army originally designed to fight a well mobilised Indian force in order that they might change their mindset to deal with insurgents and terrorists on horseback emerging from narrow alleys, then that is what we should be doing.
	Finally, we need to scale up our attempts through multilateral diplomacy to find a solution to the India/Pakistan problem pace Kashmir. It is with regret that Richard Holbrook's remit was curtailed from being a regional one that included India and Kashmir to a more limited one under pressure from India which seeks to prevent internationalising the issue. It is evident to any analyst dealing with south Asia that the Pakistani mindset is still one which, wrongly, is preoccupied with India as the sole enemy and one capable of an existential threat to Pakistan. We cannot change this mindset, which is prevalent in the security services, the military and, indeed, in aspects of the media, until we recognise Kashmir as a dispute that must be solved and then engage with both partners in the region and more widely in seeking a peaceful and durable outcome.

Lord Hylton: My Lords, I am sorry that I cannot follow the theme pursued by the noble Baroness, Lady Falkner, because I would like to examine the challenges to our foreign policy arising from the Middle East. I start from the conviction that western policy has been a signal and very expensive failure since at least the time of the Oslo agreements. The failures have perhaps been largely American ones, but Britain has been dragged along in the wake, despite the high quality of our diplomats.
	In the early 1990s, Oslo seemed like a miracle, but now we can appreciate that it was somewhat unjust and simply postponed the most important issues. The West failed to foresee two appalling wars, in south Lebanon in 2006 and the most recent onslaught on Gaza, which followed a blockade going back to 2005. More comprehensive dialogues might have prevented both wars. These wars have left Israel still insecure while alienating Hamas and much of Islamic public opinion throughout the world. Western policy could be greatly improved by not laying down preconditions. These are usually inappropriate when those affected have suffered the traumas of war, displacement and occupation. The preconditions imposed on Hamas after its election victory in 2006 were perhaps the most glaring example of this kind. My noble friend Lord Wright has already mentioned the excellent letter in today's Times, which I just hope will lead to major changes of policy.
	The other improvement in western policy would be not to demonise groups and Governments of whom we may disapprove. Iran has had a bad human rights record, both under the Shah and since his fall. The current president has, however, been elected and his Government are in full control of their territory. If I were Iranian, I would see nuclear weapons to the west, the east and the north of my country and ask, "Why can we not also have them?". What is surely needed is less western rhetoric coupled with consistent, patient negotiations.
	Are the Government studying the report from the Strategic Foresight Group, The Cost of Conflict in the Middle East? I mentioned this in our debate on 6 February and so far have had no reply. On the same day, I regretted the lack of multilateral approaches to peace and stability in the Middle East since the Madrid conference now 18 years ago, and here I agree with my noble friend Lord Weidenfeld. It is shameful that the constructive proposals of the Arab League have been so neglected since they appeared as long ago as 2002. We now urgently need to repair the harm done by attention being diverted to wars in Afghanistan and Iraq.
	States both within and outside the Middle East should try to view the region as a whole. Like the Baker-Hamilton commission advising former President Bush, we should all be asking how maximum regional co-operation can be generated and what the most appropriate new or existing institutions are that could work for the common good of the whole region. Permanent fora are needed where common problems can be discussed. This is all the more necessary given the arbitrary lines drawn by existing frontiers. Discussion of common problems could lead the way to the co-ordination of policies and eventually to varying degrees of pooling of sovereignty. Perhaps the Middle East needs its own regional version of the OECD. It may be inappropriate to speak of a Marshall plan for the Middle East, but ways should surely be found to bring together the resources and sovereign wealth funds of the oil and gas producers with the technology and know-how of western business. The aim should be to create an area of common prosperity and improved education for the mainly young populations of the region. It is worth noting that these young people are often football crazy. British teams at all levels could win friends and influence people by playing matches in the Middle East.
	When a region is anxiously searching for peace and normal life, "reconciliation" can be an overworked and sometimes empty word, but it is a time-consuming and costly process and one in which civil society has a vital role to play. Religious leaders, parliamentarians, business people and NGOs all have a common interest in working for reconciliation on two levels. There is the regional level, already mentioned, aiming to create a wide area of common prosperity, and there is the level of the state or nation. There is an obvious need for a coming together among Palestinians between the secular and Islamic parties and between both and their diaspora. Even in Israel there are tensions between Ashkenazis and Sephardim or between Arab and Jewish Israelis. Both Iraq and Lebanon have three-way splits between religious and cultural groups. In Egypt and Turkey, majorities and minorities do not find it easy to co-exist in harmony.
	British foreign policy should be humble enough to recognise the mistakes and failures of recent years. It should also be cognisant of the reconciliation needs that I have cited. It should support national and regional reconciliation wherever this is discreetly possible. National reconciliation will very often entail some form of power sharing. Here we could try to explain how power is shared in countries as diverse as Switzerland, Bosnia, Northern Ireland and, as my noble friend Lord Sandwich mentioned, Nepal. Federal states such as Germany, the USA, India, Canada and Australia also provide models of how to distribute power and responsibilities.
	Lastly, British foreign policy should take account of the acute needs of refugees in the Middle East. Palestinians have been in exile since 1948, while Syria and Jordan are now hosts to hundreds of thousands of Iraqis. The Middle East cannot be left to stagnate. The peace-loving majorities that exist there must somehow be helped to prevail.

Lord Ryder of Wensum: My Lords, I have long admired the reflections of my noble friend Lord Marlesford on foreign affairs and I congratulate him on his speech today.
	I want to contribute briefly on one subject: Russia. I welcome Vice-President Biden's "reset button" speech in Munich designed to mend fences with Russia and I applaud the Russian Foreign Minister for declaring his desire for relations between Russia and NATO to get back on track. However, I hope that these two men are not indulging in naive expectations. After all, we have endured political leaders in Washington and London whose fragile historical knowledge has landed us in quagmires in Iraq and elsewhere. Some leaders have belonged to the neoconservative tendency and others have rejoiced as disciples of Woodrow Wilson's belief in global democracy, now refashioned as liberal interventionism. The actions of these principles have damaged respect for the West.
	East-West relations deteriorated after the 2001 Genoa G8 summit, when Vladimir Putin's efforts to sculpt a modus operandi with the United States were shunned by President Bush, who lacked a grasp of the Russian mindset. Putin is merely the latest in a long line of autocratic Russian and Soviet rulers. He is a Tsarist without the regalia. It was said in 1917 that the only change to diplomacy was the personnel in the Kremlin. When the Cold War ended, not even Kremlin personnel changed in weight of numbers.
	Democratic transition has stalled in Russia. This is no surprise; Russia was never likely to speed towards a pluralist liberal democracy with Jeffersonian institutions founded on the separation of powers and the rule of law, underwritten by a free press. Russia is not liberal, yet it is as liberal as it has been in its history. Nor is it likely that Russia will want to share western values. Putin is icy to our purest forms of democracy and markets. His Tsarist model will survive for the foreseeable future. The collapse of the rouble and social unrest in Russia's rust belt strengthen his position.
	In Russia, the urge for territorial expansion has always been generated by vulnerability and the anxiety of invasion. This fear of encirclement is centuries old, stretching back to the Mongol Khans, the Poles and Lithuanians, the French and the Germans. It is genuine, not feigned, and concreted into the Russian psyche.
	Of course it is natural that Soviet republics, victims of Soviet tyranny, should want to embrace liberal democracy. It is equally plain from a study of Russian history and the nation's fear of encirclement that it should feel the need to establish spheres of influence. Yet Vice-President Biden's Munich utterances, as well as our Foreign Secretary's speech in the Ukraine last August, specifically ruled out acceptance of Russian spheres of influence.
	Today's spheres of influence, although different in size, are no different in character from those that determined the balance of power in mid-19th-century Europe. Spheres of influence are hewn from landscapes to produce a balance of power that is either stable or precarious. At present, it is relatively stable. The skill of Palmerston and Bismarck was to gauge the difference. My noble friend Lord Marlesford aptly quoted Palmerston on allies and enemies. Contemporary leaders should conform to this wisdom; after all, the world has not advanced to the so-called end of history, but has merely fragmented into different sides, reshaping older rivalries. In terms of the balance of power, Russia is not a strategic threat or an unceasing enemy. Nor is it brewing an ideology for export. I subscribe to the Kissinger maxim that the balance of power is a permanent undertaking, not an exertion with a foreseeable end.
	The arrival of a new Administration in Washington affords us the chance to contemplate these realities and, for once, to use the past as a signpost to the future. Centuries of Russian behaviour cannot be reordered by the West. The challenge is not how to change Russia but how to manage our relationship with Moscow. We must achieve a better balance between containment and selective engagement, by testing Russia's desire for a more harmonious relationship in the tradition of pragmatic caution. This entails modifying our tone with Moscow over democracy. It requires a pause from raising extra flags outside NATO headquarters. After all, meaningless guarantees can lead to shameful betrayals. It demands a freeze on the installation of ballistic missiles in eastern Europe and it means an acknowledgement of Russian energy dominance in the Caucasus. We should strive for a settlement with Russia, a tacit understanding of power balances, in our own interests. We share common objectives, such as restricting the hazards of radical Islam and persuading Iran not to develop nuclear weapons, or hampering it in its efforts to do so.
	President Obama's election is leading to a review of the West's relationship with Russia. I hope that the Government, and in particular the Government-in-waiting, will devote extra attention to studying how the lessons of history should guide the West to a more realistic approach.

Viscount Montgomery of Alamein: My Lords, like many speakers I congratulate the noble Lord, Lord Marlesford, on his brilliant introduction. It is definitely worthy of further study. His choice of title was particularly subtle: it is quite clearly a very complex subject. Having listened to many speeches, one can see the enormous variety. A good example was the speech of the noble Lord, Lord Ryder, which illustrated the complexity of the subject and what is needed to confront the various challenges that face us. My sympathies lie with the noble Lord, Lord Davies. I am not sure how he can possibly sum up this incredibly wide-ranging debate in 25 minutes. I wish him well in that endeavour.
	As anticipated by the noble Lord, Lord Wallace of Saltaire, I will turn to Latin America, where my experience over many years lies. In that capacity, I follow the noble Baroness, Lady Gibson, whose vice-chairman I am in the all-party group, and the noble Baroness, Lady Hooper, with whom I have worked for many years to promote Latin American affairs.
	Sadly, British influence has declined slowly since the Government decided that Latin America was no longer a priority. It was a very curious decision, since the GDP of Latin America is considerably more that that of Africa and the Middle East combined, and equal to that of eastern Europe. We are a small country on the fringe of Europe, but a very important member of the EU. The problem is that, although we trade extensively with the EU, when it comes to business, trade and investment, on which we depend, unless we are in joint venture with European companies, we are in competition with them; so we need a very active foreign service in this area. In that context I return to a suggestion made in an earlier debate, that we should close down UKTI and reinstate commercial offices in embassies and generally strengthen the Foreign Office effort in Latin America, which has been declining gradually over the past 10 years.
	We pay attention to Brazil and Mexico, of course, which is hardly surprising as they are both important members of the G20. Brazil is the dominant power in South America and growing fast, while Mexico is the power in the north. We all look forward to the visit of President Calderon from Mexico at the end of March. There are numerous opportunities for trade and investment in both these countries where we already have quite a lot of investment.
	Turning to more specific challenges, I want to mention Venezuela. Recently President Chavez won a clear mandate for indefinite re-election every six years, starting in 2013. The referendum was conducted with only minor infractions but was hardly a fair contest, as the Government control most of the media and used state funds on a massive scale to secure the yes vote, which also affects governors, mayors and other elected officials.
	The second problem concerns the economy. Oil, which is controlled by a state monopoly, accounts for 90 per cent of exports and 50 per cent of the budget. With high prices, Chavez could dispense largesse to other left-wing countries such as Nicaragua, Bolivia and Argentina, but with low prices he has had to withdraw foreign exchange reserves from the central bank.
	Sadly, Venezuela is showing all the symptoms that apply to Communist states: the quashing of the media, state funds for the ruling party and a cult of personality of the leader. Despite all this, Venezuela remains a fascinating and beautiful county with very talented people and a youth orchestra of international renown. There are still many opportunities for British business there, but one needs to advance with caution. I wish it well, and hope we can retain an important influence there.
	Next is Argentina, where we have an excellent embassy but little direct ministerial contact from London. A number of its opposition politicians have been to London during the southern hemisphere's holiday season. Although the presidential elections are over two years away, the Kirchners are universally unpopular and alliances and campaigns are already well advanced. I get to meet all these characters who come through London and who always deliver the same message: that it is a tragedy that the two commissions covering oil and fishing, set up years ago as a bridge-building exercise, no longer exist because Argentina has withdrawn unilaterally. Both sides would have a great deal to contribute, but the unilateral withdrawal has been more damaging for them than for us. One hopes that the commissions can be reinstated at an early date.
	To end on a positive note, at the end of April this year, the four-yearly summit of the Americas will take place in Trinidad, where President Obama is scheduled to make a major speech on both Latin America and Caribbean policy. That will be a major occasion and I hope we can return to Latin America another time to deal with what will happen afterwards, because there are many parts of the continent that are of considerable interest and to which we ought to continue to pay attention.

Baroness Northover: My Lords, I thank the noble Lord, Lord Marlesford, for putting down this topic of debate and for his masterly overview. As ever, this debate has shown the enormous depth and breadth of knowledge of noble Lords in this House. Now is indeed a good time to reassess foreign policy challenges, given the election of President Obama and the possible changes in direction of what remains, as yet, the only superpower.
	As my noble friend Lord McNally pointed out, if we see a change in political direction in our own country, we need to know what any future government might do. The present Government's track record is clear, and we know where we have agreed and where we have profoundly disagreed with them. The position of the Official Opposition is a lot less clear. Where do they really stand on Europe? I wish the noble and learned Lord, Lord Howe, very well as he so ably fights this battle within his own party.
	On Iraq, the Conservatives appear to have done an about-turn but would their gut instincts have led them, perhaps even more easily, to do just as the Government did? On Afghanistan, we hear—we should pay close attention to this—comments from some Tory MPs that they regard our role there as pretty much doomed. The noble Lord, Lord Marlesford, has expressed his own doubts.
	On development, do the Conservatives really have the gut commitment here? My party's understanding of why Europe is so important to our influence in the world, our economy, prosperity and security is well known. My noble friends Lord Wallace and Lord McNally have again expressed this extremely clearly. Our internationalism and commitment to development are also well established.
	We know that President Obama is committed to internationalism and dialogue. It is somewhat ironic that such an approach should be so welcomed across our own political spectrum when it was this Government, supported by the Official Opposition, who joined in setting aside what the UN might do with its weapons inspections in Iraq. As converts, however, the Government and the Official Opposition are very welcome.
	There are extremely hopeful shifts in the new American Administration on the Middle East, as we have heard—on Iran, on human rights, as shown by the proposed closure of Guantanamo Bay, and on climate change. The challenges facing Obama on the economy may force him to look inwards and the challenges of his electorate may restrict what he can do.
	We also know how dangerous it is to align ourselves too closely to one dominant ally where our interests can be trampled upon. The noble Baroness, Lady D'Souza, made some sobering comments on Afghanistan. Although we are the major contributor there behind the US, can the Minister say whether, in the recent review, UK participants were included in the assessments but barred from helping to frame the conclusions of that review and that it was to be a US-only exercise?
	As others have said, all our decisions may be overshadowed by the current extraordinary economic firestorm. If anything proved how interlinked our world is, this does. In 1918, the flu took six months to spread round the world but SARS recently took only 48 hours to reach four continents. Thus, too, the mis-selling of sub-prime mortgages in the US and in the UK, as my honourable friend Vincent Cable warned us, has had the effect of bringing global banking to its knees. It has also brought countries, including Iceland, Hungary and Latvia, to the verge of bankruptcy, creating massive economic destruction in its wake. We have barely felt the effects yet and we know only too well the political consequences of other severe recessions in the past. We need to beware of protectionism.
	We have to remember the UN High-level Panel's dictum of 2004 that development is necessary for security. I echo the noble Earl, Lord Sandwich, and the noble Lord, Lord Joffe, and take issue with one or two other speakers. There need not be a conflict between the undoubted need to strengthen the SEO—I have seen how remarkable its teams are in the Middle East and Africa—and what DfID does. Indeed, DfID addresses poverty, but we know that poverty leads to instability, and instability affects us all. We surely need to see the FCO, DfID and the MoD working together. Following the comments of the noble Lord, Lord Ramsbotham, I suggest that Trident should perhaps be therefore placed in the Olympics budget.
	Just as the Recess started, some announcements on the DfID budget were made. It seems that £1.65 million was transferred from DfID to DCMS for the Olympics budget. Almost £19 million was transferred to the MoD and £1 million to the FCO for the returns and reintegration fund. What is that all about? If it was always scheduled, are the amounts exactly as was originally planned? What is the effect on the percentage of income now devoted to overseas development? Are we beginning to see the effect of the black holes created by Iraq and now the financial crisis? These may be very worthy operations, but why has funding shifted from DfID to elsewhere?
	As we address poverty and instability, we have to recognise the significance of climate change, as others have said. The shift in attitude of the Obama presidency is extremely welcome. If we did not realise how climate change might contribute to instability, we should look at Darfur, where the spread of the Sahara desert has played its part in displacing people so that they prey on others. The international community is then drawn in, and we take in asylum seekers displaced by the fighting. We have heard from my noble friend Lord Chidgey quite how fragile are the states in that region.
	Ensuring that the international community is better able to deal with global problems is a major challenge. The UN has achieved a great deal in its historically very short life. What plans are there to try to improve its ability to protect? That ability is dependent on member states and their actions. What is being done to maintain and improve such international focus? Perhaps the Minister could comment on the situation in Sri Lanka and Zimbabwe in this context.
	Problem areas of the world have been mentioned by many noble Lords. My noble friend Lady Falkner effectively highlighted the significance of instability in Pakistan and its effect on the region. A number of noble Lords have mentioned Israel/Palestine. Surely the time has come to talk to Hamas, as a letter in today's Times, to which the noble Lord, Lord Wright of Richmond referred, from Michael Ancram, Paddy Ashdown and others makes clear. It states:
	"We must recognise that engaging Hamas does not amount to condoning terrorism or attacks on civilians. In fact, it is a precondition for security and for brokering a workable agreement".
	As we know, it was not military power which in the end prevailed in Northern Ireland, but the use of economic measures, legal measures to protect against discrimination, establishment of the fact that the rule of law meant something and the slow progress of dialogue.
	Other challenges have been flagged up in this debate, including dangers from nuclear weapons. The House may like to know that the Lib Dem debate day on 26 March will be led by noble friend Lady Williams of Crosby, who is very sorry that she could contribute today. She will lead the debate on nuclear disarmament.
	We have also heard about the situation in Latin America, Russia, Africa and elsewhere. There are then the challenges of tackling corruption, the arms trade and improving governance, which are all enough to keep you awake at night. However, although we may feel very pessimistic about the world today, anyone who heard Archbishop Desmond Tutu speak the other day at the British Council, as did I and the noble Lord, Lord Anderson, should perhaps take heart from his philosophy of hope. Perhaps this links back to what the noble Lord, Lord Anderson, said about the difficulty of reading the future. For Tutu, the dismantling of apartheid, the election of a black president in the United States, the comeuppance of Bush—for whom he felt slightly sorry and whom it had seemed impossible to defeat on the invasion of Iraq—all showed that change was possible, even it came very slowly.
	We need only look at Northern Ireland to see what might be done in the Middle East with the kind of engagement we may, at last, be beginning to see. People used to despair of economic development in Asia. It was deemed hopeless and impossible, not least for cultural reasons—now look at it. We heard from the noble Baroness, Lady Amos, about the problems, but also the progress, in Africa now. We see major challenges in foreign policy and need to know where all the parties stand on the route forward. I look forward to the Minister's speech.
	No one can deny that change is upon us. In the middle of economic turmoil and with conflict around the world, we surely have to work with our international partners, whether in Europe, the United States or across the UN, to bring greater stability, prosperity and order into the world for our mutual benefit.

Lord Howell of Guildford: My Lords, in a star-studded debate, the undoubted star has been my noble friend Lord Marlesford; everyone has agreed about that. He gave a superb opening offering for this debate. That does not surprise me—I worked closely with him a long time ago and have done since. Forty years ago, we worked together on the restructuring of the government system that was going to be required as we moved from the socialist age into the market age. From his fertile mind came such innovations as the Central Policy Review Staff, central capability and the systematic questioning of public sector and Whitehall objectives and outputs, in a way which would lead to more efficient delivery. I am afraid that particular lesson seems to have been lost. These were, in many cases, the initiatives of the noble Lord, Lord Marlesford, then under his commoner name of Mark Schreiber.
	This been a good debate and I hope, as many of us have said, that it will be listened to. I am told that in a depression, a slump, super-recession, or whatever we are in, people tend to crowd into music halls and places of public entertainment, to drown their sorrows. We cannot compete with that but I hope that people will pick up some of the wisdom that we have heard this afternoon. It is setting a new tone. Although we have heard some clichés and demands for new narratives, which turn out to be the old narrative, we have also heard a number of new insights into what is, frankly, a totally new situation.
	The foreign policy issues are completely interwoven with the enormous global financial crisis engulfing the entire planet. We are in a new situation. I know the word "paradigm" gets overworked, but the contours in relation to which we now have to think about what is happening in the world are different from those of a few months ago and totally different from those of a year or two back.
	Even the assumptions of 2008 are being invalidated in 2009, while we debate these issues. At a time of almost universal concern and uncertainty about the course of economic events, financial turmoil could, at any moment, spill out into civil and political order, and it has begun to do so in many countries. Irresistible pressures for protection may lead to the downfall of the whole liberal trading order—a matter about which the noble Lord, Lord Marlesford, reminded us in his opening speech—and the need for clarity of definition in our national role and purposes becomes more necessary than ever. We cannot deliver that in one debate, but we have begun to hear the beginnings of the new outlines in this frightening situation.
	I want to headline some of the major shifts in world conditions, which make our old stances and diplomacy so utterly inappropriate for the new situation that now confronts us. First, the USA is still a mighty and rich country, despite being sodden in debt, sub-prime mortgages and so on. It is a rich nation and a fine ally, and it is under a new leader who gives us all great hope. But the fact is that America is no longer the automatic leader of the world as some US officials still seem to think. Why is that so? Because we live in an age of networks, in which there is no single top-dog leader; the theme becomes not "go it alone and America will lead" but team co-operation, with America supporting. That is why my favourite phrase from Mr Obama's excellent oratory so far is his call in his inaugural speech for humility and restraint in America's approach to foreign affairs. That is the best stance for America and a major shift from the past.
	Secondly, power has shifted away not only from Washington but from the whole Atlantic axis and we are only just adjusting to the fact that western hegemony no longer "rules okay". The rising power centres and rising markets, when we have got through the present crisis, will be in Asia—in China, India and Japan and the whole Chinese diaspora of south-east Asia—and in Latin America. That includes Brazil, as several noble Lords reminded us, including the noble Viscount, Lord Montgomery, and the noble Baroness, Lady Hooper. There are also countries such as Canada, which is emerging as a giant new energy power. This demands a new respect, as my noble friend also pointed out, and even deference in place of the somewhat hectoring and superior tone of the western powers and, particularly, the Washington powers, in recent years.
	Thirdly, there is the European Union, which is our important regional zone and club in which we live, so to speak. It has achieved great things; I never denied that. I hope that I shall not disappoint the noble Lord, Lord McNally, at this point, because I know that he has especially come back to catch my every word—they will not be worth holding. We want to see the EU evolve in a constructive way. We make no secret of the fact that we did not think that all aspects of the Lisbon treaty delivered that, and that debate on that matter continues. But I think the noble Lord, Lord McNally, and his colleagues would agree that the EU today is already very different from the EU of the summer only a short while ago, with the difficulties in eastern Europe and the real dangers of default and civil unrest in parts of the new member areas of eastern and central Europe. That EU is in turn totally different, of course, from the EU that we first signed up to at the beginning of the 1980s. Twentieth-century visions of how we want to work with the rest of the European Union and be good Europeans are out of date, particularly the idea of the EU as a sort of old-style bloc or superpower in the kind of world that is no longer with us.
	Fourthly, power has not only drained away from the Atlantic capitals but slipped away from all nation states and all Governments, because there are now more than 1.5 billion people tapped into the world wide web and making their mark on opinions and events. We live in an age of networks, soft power and sub-governmental and non-governmental linkages between states and societies, which require new diplomatic machinery—a point that I shall speak on more in a moment—at state level. They require a much greater diplomatic resource, as the noble and gallant Lord, Lord Bramall, rightly reminded us.
	Fifthly, the world's and our own energy mix is changing fast. Energy is the lifeblood of our society and can of course switch us off at a moment, killing everybody and everything if it is not there. The energy mix is changing, which to some extent downgrades the importance of the old fossil fuels, oil and gas; it certainly changes the shape of our concerns about the Middle East and Russia, exposing the UK to very clear medium-term risks. So there we have the new realities. I am not talking about extrapolations, distant visions or hopes for fighting climate change—those are important—but about here-and-now facts which are already establishing themselves on the international stage and which pose immediate and important questions for British foreign policy.
	Do we have the right stances and tones in our relations with Washington, Brussels and with the new rising powers of Asia and the Middle East? That valid question has been raised in the debate. Years ago some of us commented that the Blair concept—if I can call it that—of the UK as a bridge between America and Europe did not really work and was always a flawed idea. Indeed, speakers have said that even the New Statesman has woken up to that fact.
	Do we have the right military and security dispositions to meet these entirely new conditions? Is American policy, as we think it is emerging under Mr Obama, the right one for us to follow in both detail and tone? Do we want to get into that lapdog style against which my noble friend Lord Marlesford warned? Do we want to follow the emerging policy with regard to Afghanistan or to Pakistan, where some strange things are going on? Do we want to follow that policy towards Israel, Lebanon, Syria, Iran, or towards Iraq, where hitherto Britain has followed American policy almost slavishly? It is now clear that the US policy of economic sanctions and military threats towards Iran has failed. Iran is accelerating its programme. We have seen photographs of Russian technicians starting up the Bushehr plant this very week. So that policy has failed and a radically new approach is needed. The right reverend Prelate the Bishop of Ripon and Leeds rightly pointed that out.
	In an age of asymmetric struggle, non-state terrorism and low-intensity warfare, are we right to be spending so many billions on vast hardware projects or on military procurement, which appears to be poorly managed in some cases? Are we right to spend such sums on upgrading Trident deluxe style, as the noble Lord, Lord Ramsbotham, asked in the debate and in the letter in the Times? Or are we pushing resources in precisely the wrong direction, leaving our troops inadequately equipped at times and with very low morale, as my noble and learned friend Lord Howe and my noble friend Lord Marlesford pointed out?
	Are the international institutions of the 20th century the right ones for the new century? This country always takes great pride in belonging to practically everything. We belong to NATO, the European Union, the UN Security Council and the WTO, but are they the best channels through which to project our aims, to make our contribution and to guard our security today?
	A very pertinent question was asked in the debate: are we investing in the Commonwealth as a power network of the future? My noble and learned friend Lord Howe and my noble friend Lady Hooper rightly asked that question. Are we right to invest—here I must tread carefully—so much time and effort in the endless EU institutional debate which we went round and round last summer, as your Lordships will remember? Are we right to put so much of our overseas development effort through the EU machinery? Is the EU defence structure—it is obviously important to have a defence structure—the one on which we should pin all our hopes? Have we grasped the need for a far wider context than just the EU in which to grapple with the financial reforms the world needs and the resolution of the complete imbalance between high-savings Asia and the debt-saturated western world, which was the cause of a lot of the overspending and wild borrowing which has led to the present global crisis? Are we braced in our foreign policy for the next Euro-crisis and the need to bail out, for example, Ireland, Greece, Austria, Hungary and other central European countries? That will come over the horizon in the next few weeks. We may, mercifully in my view, be free of the euro system, but the impact on our already shrinking export markets will be devastating.
	A constant issue that came up in this debate was the question: have we adjusted our foreign policy priorities to our new pattern of energy needs? Thanks to the nuclear delay we face a period of immense danger and vulnerability to global gas markets. Will our policies protect us?
	Finally, and most importantly, do we have the right ministerial and administrative systems here in London to adjust flexibly and swiftly to the new conditions? Have we got the balance between DfID and our aid policies and the Foreign and Commonwealth Office and our diplomatic resource right? Or is there a malaise, as my noble friend Lord Hurd, with huge wisdom and experience, suggested—as indeed did my noble and learned friend Lord Howe with equal wisdom and experience? What about the closure of embassies? What about demoralisation? What about the points made by the noble Lord, Lord Wright of Richmond, the former boss of the Foreign Office? Are these issues that we can afford to let drift in these new conditions?
	I have to answer a blunt "no" to all those questions. One only has to ponder for a moment on the basic realities that I have described to see how hopelessly inapposite all the policy stances behind these questions have become, as well as the systems that we have to administer them. It is a dispiriting picture. At a time when we should be forging new alliances with the powers that will affect our destiny, when we should be vigorously promoting new and more flexible regional structures for the EU, when we should be building up the Commonwealth as the ideal soft-power network of the future, when we should be massively strengthening and modernising our security forces to meet asymmetric threats, when we should be redirecting our development and aid policies, and when we should be reconstructing our overseas ministries to get a better resource balance and upgrade our whole diplomatic resource, we are doing none of those things.
	Instead, we remain locked in old ambiguities in our foreign policy. This is querulous indecision disguised as strategy and adamant for drift. It leads directly to a national loss of purpose, endangers our future, weakens our contribution to international goals and projects an image of defeatism and lost confidence. It also demoralises those very able diplomats and foreign policy practitioners who find themselves wired into the wrong administrative structure travelling along the wrong tracks.
	The global context has changed. Within it we need a new foreign policy direction based on a deep and intelligent analysis of the new world conditions, and we need new government machinery to operate it successfully with confidence and vigour. I am hopeful that my right honourable friend, the very able William Hague, will set the movement in that direction. Our country, built on its amazing and dazzling past, is still full of talent and vitality, and it deserves no less.

Lord Davies of Oldham: My Lords, this is a challenging debate to respond to. When my noble friend Lord Malloch-Brown indicated that he could not be available, my heart sank and it has not risen during the debate, as the complexities of the situation assaulted me on every side. First, however, I congratulate the noble Lord, Lord Marlesford, on his introduction. I shall do something a little different in this speech; I intend to respond at the end to his major points, because in many respects he set a context to which we need to respond. I am grateful for the way in which he established the debate, but, inevitably, a whole range of detailed issues have arisen.
	I was about to congratulate the noble Lord, Lord Howell, on his speech. For two-thirds of it I was entirely content. Not only that, but I was admiring the dexterity with which he replied to the pointed and single question of noble Lord, Lord McNally, by posing seven questions of his own, none of which will get an answer at this stage, but it was a deft way of turning the problem elsewhere. I agree with a great deal of what he said: we need to think about our foreign policy strategically and about our general policies on overseas issues in the context of a greatly changed environment. I will emphasise those points towards the end of my contribution, but I feel bound to reply to a number of issues that came up in the debate, given that noble Lords have not only spent time preparing and delivering their speeches but sat through getting on for five hours of this debate. They deserve some recognition for their work.
	My noble friend Lord Anderson first opened up the issue that the noble Lord, Lord Howell, commented on a moment ago and which other noble Lords emphasised. That flowed from the introductory approach of the noble Lord, Lord Marlesford: what about the issues regarding the strategic priorities? We established a clear Foreign Office strategy in 2008, when we set out a White Paper. We clearly need to develop fresh thinking about the overarching issues against a background in which the world has dramatically changed in certain areas. A great deal of thinking on those issues is going on. It was notable that, in the debate, only glancing references were made to those parts of the problems that confront the whole world and require the international co-operation to which the noble Lord, Lord Marlesford, referred. Those are particular issues, such as climate change.
	I heard the noble Lord, Lord Hurd, talk about declining Foreign Office resources; I will come to that in a moment. However, it will be recognised that different problems require different response strategies and that our tackling of climate change necessitates more than foreign representation. There must be much crucial and specific expertise. Britain has taken a leading role on the challenge of climate change and so I hope that this debate will be put into the context that the noble Lord, Lord Marlesford, urged. We appreciate the broad and outstanding challenges that face the world, not all of which fall easily within the framework of more conventional foreign policy. My noble friend Lord Anderson is therefore absolutely right that we need a strategy for priorities. We will, in fact, develop that along the lines that he indicated.
	Against that background, my noble friend Baroness Amos and the right reverend Prelate the Bishop of Ripon and Leeds emphasised that we need to make international institutions more representative. As we would expect from my noble friend, her excellent contributions support Africa in all these debates. The noble Lord, Lord Chidgey, spoke about Uganda and the Great Lakes and the noble Lord, Lord Blaker, talked about Zimbabwe. No doubt we all recognise that Africa presents a range of serious challenges. Conflict in Africa has reduced significantly in recent years, but that does not make the conflicts that are still being sustained any more bearable for the people involved. Several of those conflicts are as bloody as the world has ever known and cause the most enormous distress to all the victims involved.
	The noble Lords, Lord Wallace and Lord McNally, emphasised the European Union as being central to UK foreign policy. The Government entirely agree with that and no doubt the noble Lords drew the sustenance that I did from this Dispatch Box when the noble and learned Lord, Lord Howe, also emphasised those points. We await developments.
	I heard about one development that I am not too sure about. I heard as distinguished a contributor as the noble Lord, Lord Ryder, whom I remember in a past life as a Chief Whip, talk about the Government-in-waiting. The last time that I remember that phrase being used more frequently than I would have liked was in 1991. It was used by the Opposition at the time. I happened to be a figure involved in the Opposition's strategy; I may even have used it myself. I can assure him that we then had similar opinion poll leads as his party has at present. We lived to regret that outrageous term used prematurely. Perhaps the Opposition should mute their position, especially in debates of this kind. We should deal with the powers that be and what the Government are doing at present.
	As the noble and learned Lord, Lord Howe, and my noble friend Lord Anderson emphasised, we intend to work to strengthen the capability of the European security and defence policy. It was mentioned that, increasingly, when it comes to international trade and development, the world, especially countries such as China, expects Britain to work within the European framework. In crucial areas, against a background where the pressures on the United States are intense, a European response is increasingly looked for in partnership with the United States. Although we will always enjoy a special relationship with the United States, we will not delude ourselves about the fact that any United States presidency, even one as radical, challenging and, in many ways, encouraging as that of President Obama's in providing hope for all of us in participating in a better world strategy, will look to Europe—not just the United Kingdom but Europe—for support on the international stage.
	If there is one aspect of the debate that did not get the emphasis that it should have had—although the noble Lord, Lord Marlesford, dealt with the issue in suitably optimistic phrases in his introduction—it is that we recognise the point made by the noble and learned Lord, Lord Howe, that the United States is no longer the arbiter of the world with quite the extreme superpower status that it enjoyed alone for several years after the Soviet Union collapsed. America is now operating in a world in which there are several other significant economic reference points. Military power is not the only determinant of great power status.
	We must recognise the more muted position of the United States. That does not alter the view that we should look with optimism to the fact that some of the strategies that the United States pursued during the past decade are being revised. The President has indicated that he intends to revise those strategies; we should take delight from that and recognise that it is more likely that the way in which the United States pursues its objectives will be more in tune with the predispositions of this country than may have been the case during the past decade.
	I speak especially of the Middle East. The noble Lord, Lord Wright, made his usual thoughtful contribution on that and said that we often have to learn to talk with those whom we have regarded as the outright enemies and almost beyond the pale because of how they have acted. He is right. That is the only way in which, eventually, peace is secured.
	We recognise that the United States has a more flexible and constructive attitude to opportunities in the Middle East, which will require it to introduce pressures that have been absent in the past. America has not been prepared to talk with those who can contribute, even though they are often hostile to the values that we all have in the West. They are essential if we are to produce peace in such a desperately troubled area.
	One aspect of the debate that I found stimulating and challenging, but to which I have no positive responses to make, is that commented on by the noble Lord, Lord Ramsbotham, the noble and gallant Lord, Lord Bramall, and, to a more muted extent, the noble Lord, Lord King, in discussing the defence resources that we have available. We all know how pressed our military forces are in meeting their obligations. In Afghanistan, we recognise the commitment of the United States to additional support and additional troops in Helmand province, which is an indication of a constructive response on the part of the United States. British troops are doing a wonderful and gallant job in Helmand province, but we all know what the challenges are.
	I am grateful to all those noble Lords who discussed Afghanistan—the noble Baroness, Lady D'Souza, began the debate on this area—and the relationship between Afghanistan and areas of Pakistan over which no obvious legal authority obtains. The noble Baroness, Lady Falkner, in particular, emphasised the significant challenge for international diplomacy. Military might may produce the conditions in which it might be possible to win support for the development of Afghanistan, but it will not produce the development itself. We face an international situation in which it is difficult to see where the levers are for effective diplomacy to be deployed. That is why none of us should underestimate the challenges that Afghanistan produces and why I must be responsive to the obvious fact that Afghanistan looks to be a long trail ahead. There is no immediate solution to the Afghanistan problem.
	I agree very much with the priorities that have been mentioned and about the way in which they can be developed, as emerged in the constructive contributions to this debate. However, none of us should think that success in Afghanistan is just around the corner, because it is not; it is a long and abiding challenge for our forces, which is why we have to make sure that the resources are there for them to engage successfully.
	I cannot offer to the noble Lords whom I just mentioned support for their view that additional resources might be available for our forces in Afghanistan and elsewhere if we thought again about Trident. The Government's position on Trident is clear: we intend to replace Trident because we regard nuclear weapons as a necessary element of the capability that we need to deter threats from others. Conventional forces cannot have the same deterrent effect and we all recognise that we live in a nuclear world. I hear what noble Lords have said about the necessity for adequate resources for our conventional forces—those issues have to be addressed, particularly if the obligations on our forces increase—but I disavow the idea that our forces are not currently provided with the necessary resources and I certainly do not think that we could solve the problem of resources for conventional forces by saving money on the renewal of Trident. The Government have made that quite clear.
	The noble Lord, Lord Hurd, also introduced into the debate an element that, I have to confess, I had not anticipated. I wish that I had, as I would have briefed myself about it more thoroughly. He raised the question of the relative resources available to the Foreign Office and DfID. My noble friend Lady Amos made the case for DfID needing significant resources in the essential role that it plays, not just in Africa but elsewhere. There is no way of achieving stable government and the prospect of peace if the only things that people face are abject poverty and desperation, because out of poverty and desperation aggression often develops.
	Therefore, we have to put a great deal of emphasis on development, and I make no apology for—in fact, I take pride in—the extent to which the Government have devoted resources to DfID in these areas. When one talks to Governments in Africa, they emphasise strongly development support. However, I appreciate the point made by the noble Lord, Lord Hurd, that that must not be at the cost of the Foreign Office not being able to meet its obligations with regard to diplomacy in the wider world when that is such a crucial feature in the challenges that the world presents.
	I emphasise that we do not regard this as a matter of competitive resources. We seek to ensure that DfID, the Foreign Office and the Ministry of Defence work together closely with our partners across government to deliver on UK objectives through their respective contributions. One aspect of this co-operation is the public service agreement to prevent and resolve conflict. The FCO, the MoD and DfID work jointly on that objective. I take on board what the noble Lord, Lord Hurd, said, because I respect the positions that he has held in the past and his deep knowledge of foreign affairs. As he indicated, that knowledge goes a long way back, to his first professional role. Of course I respect that, but I hope that he will take it from this Dispatch Box that, so far as concerns our influence in the world, we have no intention of reducing our resources. The noble Lord may not altogether agree with the direction that we pursue, but the Government are clear that, through successful co-operation between the relevant departments, we will meet the objectives that we set ourselves. Those objectives are very wide.
	My noble friend Lady Gibson, the noble Baroness, Lady Hooper, and the noble Viscount, Lord Montgomery of Alamein—I thank him for his sympathy about winding up in this debate as I flounder even more in coping with all the contributions—all raised issues concerning Latin America. Our representation in Latin America remains strong for the obvious reason that there is enormous potential for economic growth in that area. The noble Baroness, Lady Hooper, emphasised the business opportunities and growth in Brazil, which is rapidly becoming one of the world's significant economies. We have a broad, deep and sustained relationship with that country. It is a key partner of the UK on a wide range of global issues from climate change and combating drug trafficking to promoting an expanding global economy. Brazil is playing a full part in the G20 process and will, without doubt, make a significant contribution in April.
	My noble friend Lady Gibson also raised the question of visas and the visa waiver test. We made an announcement a few days ago in the other place about how the global visa waiver test will work. I hope that my noble friend will realise that, because we place such importance on our bilateral relationships with these countries, we will of course maintain flows of tourists and others who need to take advantage of a visa regime between our countries. We will be careful to safeguard the interests of Bolivia and other countries in Latin America. She will also know that there are attendant problems that we have to address, which were part of that announcement on 9 February. Within that framework, we will seek to meet the objectives that she has suggested we should pursue.
	Issues were raised with regard to Russia by the noble Lord, Lord Ryder, and the noble Lord, Lord Weidenfeld, who also mentioned Ukraine. Of course, Russia is an important player on the international stage and we take great satisfaction from the United States indicating that it wants to look afresh at its relationship with Russia. There were comments in the debate to the effect that the West had not handled the immediate post-Soviet position and the new Russia with the greatest delicacy and insight. The noble Lord, Lord Weidenfeld, made that point quite strongly. We need to learn lessons from that. Russia has a crucial role to play. This means that, when we look at European or NATO expansion in relation to Ukraine or Georgia, we must tread with considerable care. We know why Russia is deeply anxious about such developments and we ought to take some satisfaction from the fact that the United States obviously thinks that it needs to reset the button in its relationship with Russia. We will play any part that we can in facilitating such developments.
	I turn now to what I regard as the most important part of this debate, which is the context that the noble Lord, Lord Marlesford, established. He said that this debate was about the challenges of foreign policy. All foreign policy is challenging. There is not an aspect of it that does not pose difficulties. That is why we need the resources that we have to approach foreign policy issues. What I think the noble Lord was driving at is that this is a changed world. Indeed it is. It is a world so significantly changed that we have to recognise that we will need to recast our foreign policy priorities.
	When one thinks back, there are never absolute parallels. I am very rusty on history. Someone asked me the other day whether I agreed with a quotation from Henry Ford. I thought that he was going to say, "History is bunk", but he did not. Of course, history is not bunk; history is an important source of understanding about human relationships. We understand from the 1930s that when countries chose protectionism and nationalism and tried to solve these acute and grievous economic issues on their own, they could scarcely produce a solution, unless it was a solution of the absolute extremes. One of these was the national socialism of the Hitlerian regime. That produced an economic solution, but only by creating a state of war and the nightmare represented by that fascist regime. In economic terms, the situation is not that different from the 1930s. The nature of the crisis that has developed comes from different sources, but the impact is being felt around the world in the drop in standards of living and the fact that the gross national product of many countries is plummeting. The challenges faced by all countries, both advanced and developing, are so acute that they can be solved only by international co-operation. The other solution is one that would produce disaster for the world.
	Therefore, if we are going to respond in terms of an international solution, we have to respond to the point that the noble Lord, Lord Marlesford, made. This is a new and challenging environment and one that the world economy has not faced for more than 70 years, so scarcely anyone active in our economies today is mature enough to appreciate the depth of the crisis. For all of us, this is a new learning experience and all nations will have to reassess their roles and priorities. As the noble Lord accurately identified, Congress and certainly the Senate in America looked at one stage as if they would impose an element of protectionism on the fiscal stimulus that the President was concerned to develop. However, President Obama eventually triumphed and has produced a strategy of openness with regard to investment in the economy. We have to follow suit, as does Europe and the rest of the world, including those economies that have been given due credence today, such as those of China, India and even Brazil, which are so much more important than they were just a decade ago.
	We need international co-operation, which is why the build-up to the G20 on 2 April is very important. Although I greatly regret that my noble friend Lord Malloch-Brown, who usually responds to these debates in such a masterly fashion, is not present today, the reason why he is not here is that he is involved in the crucial process of establishing the framework to ensure that the G20 conference in London is a success. The task before us is enormous and no one should underestimate it. We have to restructure and strengthen the broader global financial and economic system. We have to restore confidence and build up trust in a reformed system. My noble friend Lord Joffe said that that will be a challenging task but one that is absolutely essential, because we will not earn the respect and get the contributions of the wider world unless all our institutions build up that confidence. That may be reflected in increased representation, but if representation is not possible at the G20, given its restricted terms, countries must know that their influence is being felt on the deliberations of the conference.
	I conclude by congratulating the noble Lord, Lord Marlesford, on introducing a debate to which I believe we will return repeatedly. I use the word "we" as a collective term on behalf of the House. On the next occasion, however, I hope that the Minister will be here to respond to the debate.

Lord Marlesford: My Lords, I thank all noble Lords who have taken part in the debate, which I personally found absolutely fascinating to listen to and hugely instructive. One of the things that came through was the feeling that it should be widely read in Whitehall. The noble Lord, Lord Malloch-Brown, told me that he intends that it should be read in his department, but obviously other departments could also benefit from it. In fact, I might go further and make one suggestion. The Foreign Office could consider circulating Hansard to the heads of the appropriate diplomatic missions in London, but if the Foreign Office does not want to do that, perhaps the authorities of the House might consider it. Meanwhile, I beg leave to withdraw the Motion.
	Motion withdrawn.

Industrial Training Levy (Construction Industry Training Board) Order 2009
	 — 
	Motion to Approve

Moved By Lord Young of Norwood Green
	That the draft order laid before the House on 22 January be approved.
	Relevant Document: 5th Report from the Joint Committee on Statutory Instruments.

Lord Young of Norwood Green: My Lords, I shall speak also to the draft Industrial Training Levy (Engineering Construction Industry Training Board) Orders 2009.
	The orders seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on employers in the industries they cover. The House will be interested to note these are the first orders made in compliance with the amendments made to the Industrial Training Act 1982 by the Further Education and Training Act 2007 and cover three years.
	In the current economic climate the importance of skills cannot be overstated. We therefore welcome the orders before us as evidence that, despite the current economic difficulties, these two industries will continue to invest in the skills of their work forces in the coming years. The industrial training boards, or ITBs, whose levy orders we are considering were set up under the Industrial Training Act 1982. Their role is to encourage the provision of adequate training for employees and prospective employees in the industry. They provide a wide range of services that include setting occupational standards, developing vocational qualifications, delivering apprenticeships and paying direct grants to employers who carry out training to approved standards. Under the Industrial Training Act 1982 an ITB may submit proposals to the Secretary of State to enable it to raise a levy on employers to finance the board's activities and to encourage adequate training in the industry. The existence of a levy also shares the cost of training more evenly across an industry. The board makes proposals for the rate of levy for the industry it covers and the Secretary of State may make an order giving effect to the proposals.
	These orders give effect to proposals submitted to us for levies to be collected by the CITB in 2009, 2010 and 2011 and the Engineering Construction Industry Training Board in 2010, 2011 and 2012. As both involve the imposition of a levy which is estimated to be in excess of 1 per cent of emoluments—essentially wage costs—for some employers, the affirmative resolution procedure is required for these orders. As the levy rate is in excess of 0.2 per cent of relevant emoluments, a levy order can only be made if the Secretary of State is satisfied the proposals are necessary to encourage adequate training in the industry and that one of three conditions is satisfied. The relevant condition is that the proposals have the support of more than half the employers who together are likely to pay the majority of the levy. Both boards have followed procedures stipulated in the Industrial Training Levy (Reasonable Steps) Regulations 2008 and their proposals meet that condition.
	The Act requires ITBs to include proposals for exempting small employers from the levy. The Act does not set a minimum size threshold. Both the CITB's and ECITB's proposals set a level for the exemption of small employers that the industry considers to be appropriate. Employers who fall below the threshold are not, however, precluded from benefiting from a grant and other support from the boards, and many of them do so. In the order before the House, the CITB proposes that its levy rates should be unchanged from those approved by the House last year. That is, 0.5 per cent of payroll in respect of direct employees and 1.5 per cent of net expenditure on subcontract labour. As I said earlier, small firms are not required to pay levy, therefore employers whose combined payroll and net expenditure on subcontract labour is less than £80,000 will not have to pay the levy. This is an increase from last year's threshold of £76,000. The level equates to an employer who employs three people full time throughout the year and 40 per cent of employers come into this category. The higher levy rate on subcontract labour is because, according to the industry, the vast majority of training is carried out by those employers with a directly employed labour force. Employers who opt to use subcontractor labour are not normally involved in training.
	The ECITB also proposes to make no changes to last year's rates. First, in respect of site employees, the rates will be 1.5 per cent of total payroll and net expenditure on subcontract labour. Contractors whose combined payroll and net expenditure on subcontract labour for site employees is £275,000 or less will not have to pay the levy in respect of site employees. The level is unchanged from last year and equates to an employer who employs 15 to 20 persons full time throughout the year. It is expected that 54 per cent of sites will be exempted. Secondly, in respect of off-site employees, often referred to as head office employees, the rates will be 0.18 per cent of the total of payroll and net expenditure on subcontract labour. Employers whose combined payroll and net expenditure on subcontract labour for offsite employees is £1 million or less will not have to pay the levy in respect of offsite employees. This level is also unchanged from last year and equates to an employer who employs around 40 persons full time throughout the year. It is expected that 73 per cent of head offices will be exempted.
	Over three years, these proposals are expected to raise between £535 million to £540 million for the CITB and between £55 million and £60 million for the ECITB, which, after all, covers a much smaller industry. It is worth pointing out that the CITB currently returns to its industry £2.20 in direct and indirect training support for every £1 levy received. For the ECITB the figure is £2.52.
	The House will know from previous debates that the CITB and the ECITB exist because of the support they receive from employers and employer interest groups in their sectors. As I indicated earlier, there is a firm belief that without them there would be a serious deterioration in the quantity and quality of training in these industries, leading to a deficiency in skill levels. The boards' own annual employer surveys continue to demonstrate strong support for the principle of a levy system. The draft orders will enable the two boards to carry out their vital training responsibilities in 2009 and beyond and I believe it is right that the House should agree to approve them.

Lord De Mauley: My Lords, I am grateful to the Minister for explaining the two orders. We must surely all agree that to enable us to compete internationally and to emerge from the economic situation we find ourselves in, the safeguarding and enhancement of the skills of our workforce are vital, and not only in these industry sectors. Indeed, we on these Benches would like to see a massive expansion in the provision of real apprenticeships instead of simply, as this Government have done, proposing a statutory entitlement to them.
	We believe under the status quo that there is an excessive requirement for paperwork associated with certification and we would simplify the current inspection regimes. Among other measures, because training should be available to people of all ages, we would remove the age cap on funding.
	It is claimed in paragraph 10.1(i) of each of the two Explanatory Memoranda that in 2008 for every £1 raised in levy the respective industry training board calculated a return to the industry of £2.52 for the Construction Industry Training Board and £2.03 for the Engineering Construction Industry Training Board. Of these figures, the specific figures of £1.74 and 86p respectively are attributed to what is described as, in the case of the Construction Industry Training Board,
	"productivity gains and completion values of apprentices";
	and, in the case of both boards, what is termed as,
	"the provision of trainee recruitment and selection, advice on training, the provision of schemes for recording achievements and the development of industry standards".
	Can the Minister explain how these figures were calculated? He will forgive my suspicion of figures which are specified to the nearest penny, which somewhat limits my confidence in them.
	I notice that, unlike the Construction Industry Training Board, the Engineering Construction Industry Training Board does not expect any return to arise from what the former calls,
	"productivity gains and completion values of apprentices".
	Why not? Indeed, what are completion values of apprentices?
	In its response to the Leitch review, World Class Skills, the Government said they would consider if,
	"it would be beneficial to introduce new enabling legislation to make it easier for sector skills councils to introduce levy schemes where they consider that these would help improve skills and productivity in their sector, where a clear majority of employers in the sector support them, and where impact assessments are positive".
	Given the chronic economic situation, what further consideration has been given to this recommendation and the encouragement of other industries to use levies?
	The Federation of Small Businesses expects 120 small firms to,
	"go to the wall each day".
	I note that the smallest companies will be exempt from the levy, but how does the Minister expect slightly larger companies—for example, with 20 to 40 employees—to fund their levy obligations?
	When these orders were debated in the other place—on Tuesday this week—my honourable friend Mr Hayes asked, among other things, what proportion of labour in the respective industries is subcontracted. The assumption, which was not disputed by the Minister, was that, for understandable reasons, those who subcontract tend not to provide training, at least to anything like the extent of those who employ people directly. The Minister was not at that stage able to answer, and offered to write to my honourable friend. I did not catch whether the Minister himself answered that point. I wonder whether, with the benefit of a couple of days' notice, he is now in a position to give a response to that question.
	My honourable friend also asked about the extent to which the skills pledge is being observed by those who have signed up to it. The Minister in the other place was again unable to answer, and again offered to write, but said,
	"more than anything, the pledge is a statement of intent and commitment and is a badge of honour amongst employers".
	The Minister will appreciate that we are somewhat sceptical about statements of intent and badges of honour, and would be most interested to hear whether, with the benefit of notice of that question, he is now able to give us more tangible details of the levels of observation of the pledge.
	Finally, I have a couple of questions that concern another industry's training board levy. I raise them because the Minister's answers may be instructive regarding the Government's intentions in a wider context. In view of our country's brilliant successes this week in the Oscars—I do not think "brilliant" is too glowing a superlative—noble Lords will forgive me if I talk briefly about the film industry training board levy. First, following the success of that industry's training board's voluntary levy, can the Minister explain why it has been decided not to make that levy mandatory? It has been reported in the press that a number of concerns have been raised by those in the film industry about the lack of consultation before making the decision. What assurances can the Minister give that further changes will not be made without adequate consultation and, of course, due consideration to the economic climate?

Baroness Sharp of Guildford: My Lords, I, too, thank the Minister for explaining so clearly what these two levies are about. For the past nine years in this House, I have taken the annual statement of these levies, and I was wondering when the changes that we put into effect in the Further Education and Training Act 2007 would come into force. I am delighted that, with these two orders, we are making arrangements for the levies to exist for the next three years. I noted previously that they were set up under the Industrial Training Act 1982. The Construction Industry Training Board and the Engineering Construction Industry Training Board were the only two industry training boards that opted, under the Act, to have an industrial training levy. The reason is well indicated by the two surveys that we have before us. The industry has been well served by the levy. Others have remarked that as well as a number of very large firms, the industry has a very large number of small firms, self-employed workers and subcontractors, and the levy grant system has enabled the establishment of a training system across both industries that has proved to be very satisfactory.
	Like the noble Lord, Lord De Mauley, we on these Benches see this type of system as being relatively satisfactory, and are surprised that more of the sector skills councils are not seeking to extend the system to other industries. We have talked about the skills pledge. One thing that the CITB has introduced has been the smart card, which has kept note of what qualifications people have acquired as they have proceeded through the industry. This has been an extremely successful experiment, and is being extended. It is a system that we on these Benches very much commend.
	With regard to the benefits secured for each pound spent in relation to the Construction Industry Training Board, we note that the figures given in the Explanatory Notes are slightly different—it was £2.03 for the CITB, rather than the figure quoted by the Minister—but I suspect that he has more up-to-date figures. The Engineering Construction Industry Training Board reckons that it gets £2.52 back for every pound spent. Perhaps we are less sceptical than the other Benches but we take these figures as stated, partly because one sees the advantage to the industry of these schemes. We have no problem endorsing these orders and agreeing with the Minister that they should be passed.

Lord Young of Norwood Green: My Lords, I thank noble Lords for their response. I will deal with the noble Lord, Lord De Mauley, first. I was a bit disappointed with his response on apprenticeships, but I suppose it follows on from some comments by one of his colleagues in the other place. I find it astonishing; in my recent comments about apprenticeships I have likened them to a hospital patient, and when we encountered this patient in 1997, after the tender care of the previous Government, it was in intensive care. There were only 65,000 apprentices nationwide, and just over one-quarter of them completed their apprenticeships. If you wind the clock forward to last year, for the noble Lord's benefit, you find around 250,000 apprentices, nearly two-thirds of whom completed their apprenticeships. I regard that as a renaissance, and indeed the employers whom I meet share that view. So I am puzzled about that the noble Lord's comments.
	I understand why the noble Lord talked about funding the age gap, where we fully fund those below 19 and then progressively up to a maximum of 50 per cent. Employers ought to pay some contribution towards the training cost. That is because we feel that the adult apprentice brings a bit more experience to the company and does not require quite the same amount of cost of care—they are a bit more productive. That is why there is that difference, but there is some validity in the noble Lord's point. Whether we have the funding to be able to do that, I am not so sure. We have been focusing, rightly, on protecting the maximum number of apprentices that we can where we encounter situations where they are made redundant and on sustaining and nourishing them so that we continue to make the superb progress that we have been making towards the targets we have set ourselves, as defined in the Leitch review. We have said that we want an apprenticeship available for every young person by 2013 and 400,000 when we reach 2020.
	On the calculation of figures, the best thing I can do is to write to the noble Lord to explain. I believe we have provided those figures in good faith, but we will endeavour to sort out any discrepancy. I trust that the figures in my brief are the most accurate.
	The industry levy is there because, as the noble Baroness, Lady Sharp, reminded us—I congratulate her on her staying power if she has been through so many of these debates—the industries believe that it is valid and plays a vital role in providing training and the necessary skills for those industries. They are absolutely right. However, that depends on those industries being willing to do it. If other sector skills councils shared that view and were prepared to make those contributions, we would make progress in that direction.
	We have had different approaches, as noble Lords know. Other sector skills councils have embraced what they call sector skills compacts and have endeavoured to make significant progress in those directions. We have encouraged the growth of sector skills academies, again to ensure that employers have more buying power in the kind of learning they require. We are making significant progress, therefore, and spending large sums on apprenticeships—£1 billion per year for next year and the following year—and on initiatives such as Train to Gain.
	I did not fully understand what was meant by the completion value of an apprenticeship and maybe I will need to respond on that. From my point of view, in a general sense, we have made it absolutely clear that an apprenticeship is not completed unless there is an employer placement. In the past there was some dubiety about how to count apprenticeship figures. Now we try to make this absolutely clear. There has to be an employer placement and it does not count as a completion unless that is the case.
	We are now trying to deal with situations where some apprentices have been made redundant, especially in the construction industry, and may be in the last six months of their training. We try to place them with other employers or get the existing employer to enable them to complete their apprenticeship. We have had significant success here. The Construction Industry Training Board has created a clearing house where it has managed to place many cases successfully with other employers. There is more work to be done to ensure that we enable apprentices to complete their apprenticeship. It is important for the individual who has invested a lot of time and it is important for the brand so that neither the candidate nor their parents feel that the apprenticeship has been a waste of time.
	There is considerable consultation within the industry on who the levy applies to. That is one of the good things about the process. There is wide consultation within the industry before it comes to its conclusions. Whether or not we change the formula in relation to companies with 20 to 40 employees ought to be a matter for the training boards to determine.
	I cannot give the noble Lord an accurate figure for how many people fulfil all the terms of the skills pledge. I was surprised that he expressed such cynicism. What motivation has someone in signing a skills pledge? We do not give them any money to sign it although we help them with the cost of training. I have attended a number of Chambers of Commerce meetings around the country since I have been in this office. I have seen employers at those meetings who have previously signed the skills pledge telling the Chambers of Commerce members about the real benefits they have seen in training their employees, including improved customer service, improved productivity and improved returns on the balance sheet. The peer group, therefore, has constantly emphasised the benefits of training. For me to recommend it is one thing—people might be a bit cynical. When, however, their own business peer group tells them there is a real value in training all employees to level 2 and demonstrate practically the benefits they have achieved, we need not be cynical about it. However, we are monitoring the process.
	The one point where I would agree with the noble Lord is to have statistical evidence to show, for example, where the thousands who have signed the skills pledge are in the process of ensuring that every member of their staff has reached level 2. I can assure the noble Lord, however, that I have encountered many examples of companies which have carried out the skills pledge and have testified to the efficacy and the benefits they have achieved within their company.
	With regard to what the noble Lord said about the Oscars and the Film Industry Training Board levy, unless I have misunderstood the process, we do not impose a levy. The board will determine whether a levy is right. Given the uncertain nature of film financing, I think that it will take a long, hard look at it. I thank the noble Lord for that information.
	I have tried to cover all the points raised. I am conscious that there were one or two where I was not able to give a complete explanation, but I assure noble Lords that I shall write in those circumstances. I thank again the noble Baroness, Lady Sharp, for her comments. I also endorse her point about the smart card in the construction industry. The clear record it provides of the courses that workers have undertaken—a sort of passport as they go from site to site—is a valuable initiative.
	The proposals before the House relate to the construction and the engineering construction industries. It continues to be the collective view of employers in these two industries that training should be funded through a statutory levy system to secure a sufficient pool of skilled labour. I believe that it is not in dispute that the orders should be approved, and I commend them to the House.
	Motion agreed.

Industrial Training Levy (Engineering Construction Industry Training Board) Order 2009

Copy of the Order
	5th Report from JCSI

Motion to Approve

Moved By Lord Young of Norwood Green
	That the draft order laid before the House on 22 January be approved.
	Relevant Document: 5th Report from the Joint Committee on Statutory Instruments.
	Motion agreed.

Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 2009

Copy of the Order
	4th Report from JCSI

Motion to Approve

Moved By Lord McKenzie of Luton
	That the draft regulations laid before the House on 21 January be approved.
	Relevant Document: 4th Report from the Joint Committee on Statutory Instruments.

Lord McKenzie of Luton: My Lords, I start with the formalities. It is a requirement that I confirm to the House that these provisions are compatible with the European Convention on Human Rights and I am happy to do so.
	The regulations are being made under the Pneumoconiosis etc. (Workers' Compensation) Act 1979 and their purpose is to increase the amounts of compensation paid under the Act by 5 per cent to those who first satisfy all the conditions of entitlement on or after 1 April 2009. I am very pleased to introduce the regulations on behalf of the Government.
	This compensation scheme stands apart from social security benefits and, as a result, the amounts paid are not increased as part of the overall uprating of benefit rates. In the first 25 years of the scheme's operation, this meant that the amounts to be paid were not increased on a routine, annual basis. However, following the transfer of responsibility for this work to the Department for Work and Pensions, a commitment was made to increase the rates of payment annually. I am very happy again to honour that commitment. It is important that we continue to do so in the future.
	This scheme fulfils an important role in providing compensation where no civil action can be taken against an employer or the person responsible for the exposure to one of the listed agents. Anyone suffering from a dust-related disease as a result of their work can sue their employer. However, the diseases covered by this Act, and asbestos-related diseases in particular, can take a long time to develop; it may be as long as 40 years or more after exposure to the dust. That means that by the time the illness is diagnosed the employer or employers responsible may no longer be trading. In those cases, there is no opportunity for a sufferer or their dependants to sue for compensation.
	Improved health and safety procedures have both restricted the use of asbestos and provided a safer environment for its handling. However, we cannot turn back the clock and solve the problems created by the widespread use of asbestos before its effects on people's health were fully understood. We are now facing the consequences of that common usage. Although we cannot remedy all the problems, we can at the very least ensure that financial compensation is available. This scheme was introduced to meet that purpose and I am pleased that it has done it successfully.
	The Act provides for a single lump-sum payment to be made to a sufferer. This lump sum is in addition to any award of industrial injuries disablement benefit. Together the payments constitute a significant financial package. Under this scheme, the maximum amount that can be paid from April 2009 is just over £74,000 for a person aged 37 or under at diagnosis, although the average payments are much lower; the highest amounts are paid for those diagnosed at an early age. In addition, a person diagnosed with mesothelioma is automatically assessed as 100 per cent disabled for the purposes of industrial injuries benefit and, from April 2009, will be paid £143.60 a week.
	There are three conditions to be satisfied before any payment can be made. First, the sufferer must be entitled to industrial injuries disablement benefit. Secondly, there must be no relevant employer who can be sued. Thirdly, no court action can have been brought, nor any compensation received, in respect of the disease now being claimed under the Act.
	The Act covers five respiratory diseases, most of which are directly related to asbestos exposure. These are mesothelioma, pneumoconiosis, which includes asbestosis, diffuse pleural thickening, primary carcinoma of the lung following exposure to asbestos, and byssinosis. However, mesothelioma is the major reason for a claim. About 80 per cent of claims are being paid because a person is suffering from that disease. Mesothelioma is an extremely severe form of cancer and is invariably terminal within a short timescale. The average life expectancy is only 12 to 18 months from the time that the disease is diagnosed.
	Since the Act was introduced, payments totalling £256 million have been made, with payments of just under £26 million made in this year alone. I am pleased that this scheme continues to perform an important role in providing compensation.
	Sadly, the number of people being affected by asbestos-related diseases continues to rise. In 1968, only 153 people died from mesothelioma. In contrast, in 2006, there were just over 2,000 deaths. It is estimated that the number of deaths is expected to peak sometime between 2011 and 2015. It is now the most common cause of work-related death.
	This scheme continues to be very successful but some people suffering from mesothelioma are not entitled to any payment under the 1979 Act because they were not exposed to asbestos in the workplace. This was recognised as a weakness in the provision of compensation. I am pleased to note that new legislation, taking effect last October, has remedied the matter. For the first time, from 1 October 2008, compensation has been provided to people suffering from mesothelioma whose exposure did not occur at work or where the source of the exposure cannot be identified. This scheme largely mirrors the provisions of the 1979 Act in providing a single lump-sum payment and should ensure that everybody suffering from mesothelioma is paid compensation, either from the Government or through the courts.
	My officials estimated that in the first year of the new scheme we would expect about 1,200 claims, with about 600 a year after that, the higher numbers in the first year resulting from the number of people who were already suffering from the disease when the new scheme was introduced. The number of claims in the first four months is slightly lower than we expected, at just under 300. In total, compensation of approximately £4 million has been paid.
	I am certain that we all agree that no amount of money will ever compensate these sufferers or their families. However, these regulations help to ensure that the compensation provided for in the original Act maintains its value. I commend the uprating of the payment scales to noble Lords and ask their approval to implement them.

Lord Skelmersdale: My Lords, I am grateful to the Minister for explaining the regulations and the background to them so fully. We will spend some time, although at this late hour I hope not too long, discussing welfare payments of various shapes and sizes.
	We start with an annual uprating for these perfectly horrible dust-borne diseases, leading in many cases to cancer of the lung and, ultimately, death, resulting from employment in principally, but not necessarily, the mining industry. Former employees of firms contracting to remove asbestos, especially blue asbestos, from buildings, even building sites, will also be included. These employees and their dependants can claim on this state scheme only when their former employer has gone out of business and no insurance cover exists. This is particularly the case, as the Minister almost said, given that many years ago asbestos, in particular, was not known to be a particular hazard of the industries in question and so was not insured against. By law, however, insurance companies have to keep records for 60 years, so insurance money can be payable long after a firm ceases to trade, as long as an insurance contract was in force for the employees in question at the time they were employed and it is accepted that one of these prescribed diseases originated at the time of employment.
	The problem is that the disease in question may take a long time to show itself and, in the past, and indeed again today, Ministers have used the timescale of 40 years as a guide. My first question, therefore, is: has the Minister any idea how many new insurance payouts there have been in the last year, compared with the new payouts under the scheme? I suspect that that is a slightly devious question and that he will have to write to me on that, which of course I would accept.
	I thought that we knew, because we have been told often enough in past discussions, that the claims on the scheme were expected to peak in 2011, but we have just heard from the Minister that that has been extended to 2015. What evidence is there for that claim? Does he expect 2015 to be the date for a few years, or can we expect Ministers in future to put back the time when payments will peak? This is an important point. At a time when government expenditure, of which I shall have more to say later this afternoon, is under more stringent scrutiny than at any time I can remember in my time in this House, it is important to know exactly when expenditure on pneumoconiosis and the other diseases is expected to peak.
	On the point of insurance cover, I note that the Explanatory Memorandum states that a full impact assessment has not been produced for this instrument, as no impact on the private, public or voluntary sectors is foreseen. The words "private" and "sector" taken together must surely include insurance companies. Is not it at least likely that insurance companies will base their awards on those payable under this scheme and that, consequently, there will be an effect on them, or will the Minister tell me that I am barking up the wrong tree with this supposition?
	My next interest arises from paragraph 12.2 of the Explanatory Memorandum, which states:
	"An internal review will be conducted on 1st April to ensure the uprating has been successfully implemented".
	There are two points. First, these regulations do not come into effect until 1 April. Is not it a bit previous to review them on the very day that they come into force? Secondly, thanks to the Government's former welfare adviser, David Freud, the whole realm of social security benefits is coming under review, although as far as I know he has not looked at this scheme. Given the plethora of Green and White Papers, to say nothing of reports on the subject of welfare reform, will it be possible to see the results of this review?
	There are still an awful lot of people with these compensable diseases who would like to know whether the scheme is working properly. Indeed, I had an e-mail some time ago saying that, once assessment had been made, it sometimes took a very long time for the payment to come through.
	That being said, I congratulate the Government. I am well aware that Ministers and their advisers frequently find my remarks carping. However, I cannot remember an occasion when I have not recognised when credit is due, and it is with these regulations. The Government have lived up to the promise that they made in 2004 to uprate the payments under this scheme by what this Explanatory Memorandum calls,
	"the agreed rate of inflation".
	However, I am not sure what the word "agreed" means in this context. For many years it has been the norm that most benefits should be uprated by the inflation recorded in the previous September. This, as we all know, was 5 per cent, a figure that will be spoken of quite a lot this afternoon. Therefore, these regulations increase the lump sums awardable by that amount. As a part-time horticulturalist, I call that DDT, which stands for "doing the decent thing". Many new claimants will be grateful to the Government, as I believe we in Parliament should be—just how many, time will tell, but given the fact that the numbers are expected to peak sometime in 2011, the Minister must have some idea. Will he let us into the secret?

Lord Kirkwood of Kirkhope: My Lords, I am grateful to the Minister and to the noble Lord, Lord Skelmersdale, for their helpful remarks. Like the noble Lord, Lord Skelmersdale, I have no intention of doing anything other than taxing the Government about the details of the scheme because the regulations are an extremely sensible continuation of the Government's valuable work. I concur with the remarks made by the noble Lord, Lord Skelmersdale, in that regard. I encourage him to keep recognising the Government's good work, as he does. At least I take note of that, if that is any consolation to him, although I do not know whether the Government do.
	This annual debate is useful. The Government have inflicted an annual debate on themselves because they refuse to index the benefit, which I think is slightly daft. I understand that the department think that the benefit will peak in 2011 or 2015, or perhaps even in 2020—we do not really know that yet—and therefore it is not necessary to put it into the 1992 uprating Act to give the 5 per cent uplift, which would also have the result that this debate would not need to take place every year. From where I am sitting, it would be much more sensible for the Government to wrap this in with the other uprating order provisions. However, since we have this debate, the noble Lord, Lord Skelmersdale, and I are perfectly entitled to make the best use of the time to apply pressure on the Government with regard to this matter. Some of the questions that I wish to pose are detailed and may involve an exchange of letters. I should also like to pursue some of the ideas that the noble Lord, Lord Skelmersdale, has raised.
	The administrative pressure continues in this regard. The small dedicated unit does valuable work but I think that it comprises only about eight or 10 people to clear this work. I do not know what their target date is to clear the casework, but I fear that the administrative budget will come under pressure, as I think the noble Lord, Lord Skelmersdale, hinted. Delays in paying some of the compensatory lump sums is of critical interest to the relevant families and claimants. I hope that we can be given further reassurance on that. The Minister did his best to put on the record the fact that he was confident that the job was being done properly and that no one was being subjected to intolerable delays of any kind. However, I would like to be given that reassurance again if he feels able to give it.
	The Minister was kind enough to list some of the trends and the average payments, but how is the funding of the scheme bearing up? It is still in its early days; it was introduced only 12 months or so ago. There was an understanding—certainly on my part—that reclaimed amounts would come back into the system where civil actions resulted in compensation that the benefits system sought to claim back. It may be too early to obtain any sensible data on that but noble Lords are interested in the totality of the funds coming in and the funds going out and want to know how the scheme is progressing. If the Government are able to reclaim money from payments made in civil cases, there may be more scope for encouraging the Minister in future years to look beyond the 5 per cent uprating figure and be a little more generous if more money is coming in than was originally anticipated when the scheme was put together.
	My next point may be more suitably dealt with in a letter than in an immediate response. Medical science and technology change with regard to the way in which these diseases are understood, treated and predicted in terms of diagnosis and prognosis. I should be very interested to know whether there is any new medical thinking on these diseases. Mesothelioma is being scrutinised to see if better treatments can be devised for it. If there is anything in the offing that the department knows about that would affect the scheme and claimants, noble Lords would like to know about it.
	Finally, the Minister will know that the industrial injuries disablement benefit scheme integrates into these regulations. Perhaps he can confirm one thing that has changed in the past 12 months. When we last discussed these regulations, I was pretty confident that the department was doing a full-scale review of the scheme. The noble Lord, Lord Skelmersdale, alluded to this. The consultation was launched with some fanfare in 2007; indeed, there was publication of a reprise and analysis of the extensive responses that the consultation provoked. All that was very useful and it looked as if the Government were on a path that had some momentum towards reviewing how they would deal with the future of this benefit.
	However, that seems to have fizzled out, because the recent White Paper said, "Well, we think things are all right, really". Subsequently, a Written Answer to a PQ in another place stated, "We think that the scheme is okay". Is that the Government's position? Certainly the people to whom I talked who had responded to the consultation thought that the scheme was a good thing; they thought that it should not be abolished or made substantially different, but that it needed reform. One of the main reforms suggested in the consultation was that the scheme should provide more help for people to get through rehabilitation and back into work, which would seem to fit the Government's agenda. Yet the review of the scheme seems to have hit the buffers. I may be misreading that, and the noble Lord, Lord Skelmersdale, had some questions in that area.
	It would be helpful if the Minister could clarify the departmental view of the scope that there may be for the review of this important disablement benefit. Perhaps if he cannot do that today, he could do that at another time. The benefit is a weekly payment, which, as he knows, involves a qualifying eligibility requirement: you do not get the compensatory payments covered by these regulations unless you are entitled under the scheme. If there is another way of helping people who are suffering from these terrible illnesses—I agree with the noble Lord, Lord Skelmersdale, that they are horrible and life-threatening—with an update and modernisation of the industrial injuries disablement scheme, as well as through the benefit of these welcome regulations, that would be a very good thing.

Lord McKenzie of Luton: My Lords, I thank the noble Lords, Lord Skelmersdale and Lord Kirkwood, for what I take to be their support for this order, but, quite rightly, they used the opportunity of the debate to raise a number of detailed questions, which I shall try to answer.
	The noble Lord, Lord Skelmersdale, asked an interesting question about new insurance payments. I do not have that data, but if it is available I shall certainly seek to write to the noble Lord. He also raised a point about whether the impact of these provisions would feed back to insurance company payouts. That was an interesting point, but we would not expect the rates paid under the Act to impact on how much is paid for damages in civil law. However, we are happy to check that point and revert to the noble Lord. He asked about extending the peak to 2015. The noble Lord, Lord Kirkwood, would understand that this is not a precise science and even beyond the peak there will clearly be a long tail to these instances. These are just the current best estimates, because at one stage, for example, it was thought that 20 years was the period during which mesothelioma would present itself. Now, as we have discussed, that period could approach 40 years and beyond. That has led to the peak increasing.

Lord Skelmersdale: My Lords, can the noble Lord explain something? Since these are one-off payments, there must be a rising acceptance of the incidence of these diseases before the peak is reached and then falls away. How does what he has just said fit in with that?

Lord McKenzie of Luton: My Lords, unless I misunderstand the noble Lord, it is not inconsistent. We are saying that, yes, a peak is expected: we are dealing with problems from the past.

Lord Skelmersdale: My Lords, I think that the Minister has misunderstood my question. He is quite right to say that, in the old days—as, indeed, when I was introducing orders under this scheme many years ago—there was thought to be a 20-year operation before the peak, and that it would then fall away. However, does it make much difference whether it is 20 or 40 years?

Lord McKenzie of Luton: I would have thought, my Lords, that it does. The longer the latency period, the more cases we will get coming through that we would earlier have assumed would not present themselves, because of there being a 20-year horizon. The longer that period is recognised to exist, the longer we have to wait for potential cases to come through. It may be that I still misunderstood the noble Lord's point. If so, I am happy to discuss it outside with him. On inflation, the agreed rate is that which we are using in all social security benefits—the RPI, which, as the noble Lord noted, we shall be talking about a little later.
	The noble Lord, Lord Kirkwood, asked how the financing is progressing. For these purposes, we need to differentiate the government-funded 1979 Act provisions from those in the 2008 Act. The recoveries from both provisions were going to fund the 2008 Act scheme, and it is obviously early days for that scheme. We are financing it by recoveries from the 1979 and 2008 Acts, and paying people for the first 18 months of the 2008 Act scheme at the same reduced level, because we will not have recovered sufficient funds to pay at the higher 1979 Act levels. However, we have said that we would increase payments to those of the 1979 Act by the third year, and hope to be able to do so by April 2010. It would be good if we were indeed able to do so.
	The noble Lords, Lord Kirkwood and Lord Skelmersdale, both asked about administration and payment times in particular. My information is that under the 1979 Act provisions and the current arrangements—the period from 2008 through to January 2009—the average payment time is 56 days. It is much quicker under the 2008 Act, because there is no need to establish the connection with employment, and the average time for payment is within three weeks. I understand that the small team dealing with those payments, based in Barrow, are currently dealing with those payments faster.
	The noble Lord, Lord Skelmersdale, asked about the review. It is quite right that we review the introduction of the order, and I am obviously happy to share the effect of that with him, but we need to make sure that these new provisions are operating right from the start of the year. We intend to do that. The noble Lord, Lord Kirkwood, asked why this is not dealt with alongside the rest of the uprating. I will guess that we could do that, but we will have our debate on that shortly. This is separate legislation, distinct from the social security benefits, which is why we are dealing with it in this way.
	The noble Lord, Lord Kirkwood, asked about IIDB reform. He is quite right that we made it clear, in the White Paper that we published on 10 December, that while some respondents to the Green Paper consultation supported the principle of lump sum payments for IIDB customers, others commented that there was a need for ongoing support for some people injured or made ill by work—particularly for those with serious progressive illnesses. We believe, therefore, that there remains a strong case for continuing to provide particular support for people whose disability arises from work, and that the current Industrial Injuries Disablement Benefits scheme is the best way to do this. That is our latest position on the issue.
	The noble Lord, Lord Kirkwood asked whether any medical evidence is developing that helps us better to understand and treat those awful diseases. Nothing that I am aware of has been developed recently that helps us. Sadly, mesothelioma is still always terminal within a very short time.
	I hope that I have dealt with each point raised by noble Lords; if not, I am sure that they will press me further. I ask for acceptance of the order.
	Motion agreed.

Child Support (Miscellaneous and Consequential Amendments) Regulations 2009

Copy of the Order
	5th Report from JCSI

Motion to Approve

Moved by Lord McKenzie of Luton
	That the draft regulations laid before the House on 26 January be approved.
	Relevant Document: 5th Report from the Joint Committee on Statutory Instruments.

Lord McKenzie of Luton: My Lords, the Child Support Agency, as part of the Child Maintenance and Enforcement Commission, continues to have responsibility for administering applications for child maintenance under the existing statutory schemes. This package of regulations is intended to aid it in that task.
	Noble Lords will be aware that the commission came into being as a result of the Child Maintenance and Other Payments Act 2008. The 2008 Act provides for a new system to calculate maintenance payments, which will use gross income details supplied by HMRC, as well as tougher enforcement powers and other administrative changes. The majority of the provisions contained in the 2008 Act are, however, yet to be commenced. We must therefore ensure that the existing system operates as well as possible prior to the new powers coming into force.
	The regulations will add to the conditions in which child maintenance liability can be recalculated where non-resident parents take steps to divert their income and so reduce their maintenance payments; disregard certain credits paid to both the non-resident parent and the parent with care for the purpose of calculating the maintenance liability; and make consequential changes to legislation to bring it up to date with the equalisation of state pension age for men and women.
	The amendments to the diversion of income provisions within the variation and departure direction regulations became necessary following a recent Upper Tribunal decision. The judge, formerly known as the Child Support Commissioner, held that where the non-resident parent was diverting a significant amount of his income into a pension scheme, and in doing so was driving down the amount of net income that could be included to calculate the maintenance liability, the maintenance calculation could not be altered, as doing so would be outside the scope of the regulations as currently worded.
	For child maintenance applications which have effect from 3March 2003, known as the current scheme, pension contributions are wholly disregarded from the calculation to establish the liability amount. That means that net weekly income is reduced by the amount of the contribution. For applications which take effect prior to 3 March 2003, which are known as the old scheme, half of all pension contributions are disregarded.
	A change to HMRC rules in April 2006 removed the cap on pension contributions so that up to 100 per cent of earnings may be contributed to a pension scheme without loss of tax privileges, subject to a lifetime cap. Of course we must encourage people to make provision for their retirement, and those changes to pension rules are an entirely reasonable way to achieve that, but a potential loophole in child support legislation has come about as a result of that and the Upper Tribunal's decision.
	Although most non-resident parents pay a sensible proportion of net weekly income into a pension scheme, the commission is aware of a small number of cases where non-resident parents are making significant pension contributions and using other income not assessable for child maintenance to live on, such as a partner's income. The child maintenance liability can be severely depressed as a result.
	However, where the non-resident parent is diverting high levels of income into a pension scheme or other form of otherwise allowable expense, it has always been our intention to allow the maintenance liability to be altered following an application from the parent with care. Regulations 2 and 4 therefore simply restore the original intention by amending the departure direction regulations for the old scheme and the variation regulations for the current scheme. I hope that noble Lords will agree that non-resident parents should not be able to make substantial pension payments at the expense of their children's upbringing and that a sensible balance should be struck between paying child maintenance and saving for retirement. These regulations will help bring about that balance.
	Regulation 3(5) enables the Commission to disregard in-work credit, better-off-in-work credit and return to work credit for old-scheme maintenance applications, by making the necessary amendments to the Child Support (Maintenance Assessment and Special Cases) Regulations. It is already possible to disregard these credits for the current scheme by using the existing legislation, and amending regulations are not therefore needed in this respect.
	These credits are paid weekly for a maximum of 52 weeks and are intended to help people move into work for at least 16 hours a week and not return to benefits. They are not part of the tax credits system.
	These credits were disregarded for a range of different purposes, including national insurance, council tax benefit, housing benefit and tax credits. These credits are there to aid the transition from welfare to work, and it would not therefore be appropriate for the Commission to treat them as income. Doing so would, I believe, risk undermining the underlying principle that led to the creation of these payments.
	While both parents have a right to expect that they are assessed fairly for maintenance payments, in that all forms of relevant income are taken into account, treating these credit payments as income could lead some people to conclude that it is in their best financial interests to remain out of work and on benefits. If that were to happen, the Commission would not collect anything more than the minimum payment from non-resident parents and parents with care, whose income is taken into account in the old child support scheme, would be unable to improve their own financial situation, and that of their children, by finding work. If, on the other hand, they were able to find stable employment, those parents would be able to contribute much more to the maintenance of their children.
	The rest of Regulation 3 makes amendments consequential to the equalisation of state pension age. Under the Pensions Act 1995, equalisation of state pension age between men and women will be gradually phased in between 2010 and 2020.
	As a consequence of equalisation of state pension age, the disability premium in income support will in the future be payable up to the qualifying age for pension credit, which will increase in line with the state pension age for women from April 2010, whereas it is currently payable where the qualifying person is aged under 60. The regulations therefore refer to the non-resident being under 60 years of age. This needs to be updated so that it is in line with the increasing age of qualification for Pension Credit.
	I am satisfied that the statutory instrument before us is compatible with the European Convention on Human Rights and I commend these regulations to the House.

Viscount Eccles: My Lords, I am a member of the Merits Committee and have been so for approaching three years. This is a short instrument about a complex matter which has a long history and I am very grateful for the full explanation given by the Minister this afternoon. I would just like to suggest to him that it would have been better if most of that had been in the Explanatory Memorandum. It is surely the wrong way round to put forward a very short and rather sketchy memorandum—I fully accept that the Commission is a new body—and then to have the very full explanation in the House. It would be better if the full explanation were in the Explanatory Memorandum, which would, no doubt, shorten your Lordships' proceedings.
	On February 10, and reported on February 12, the Merits Committee considered this instrument. If we look at it from the point of view of the Merits Committee, it is a paper chase. There are eight Acts of Parliament involved in this instrument and four existing sets of regulations, apart from the draft regulations in front of your Lordships this afternoon. There are two schemes, the older and the newer scheme, as the Minister told us, using different definitions but covering essentially the same issues. On top of all that, there is the new Commission, for which Regulations 2 and 4 are made, transferring the responsibility from the Secretary of State to the new Commission. The new Commission came into existence in November 2008 and it is a bit soon to expect it to be fully up and running—I think there are only two commissioners at the moment. Its website is, no doubt, going to become very informative. It is not tremendously informative at the moment.
	This all means that complex consideration needs to be given to this matter in a very short period by the Merits Committee and its staff. I wonder whether the Minister enjoys the complexity with which we are faced. Is it in the public interest that matters are so complicated? If not, what is to be done about it?
	I would be the first to say—I shall say it this afternoon—that the two advisers to the Merits Committee, Jane White and Paul Bristow, are, first, extremely skilled at their job and, secondly, incredibly diligent. However, they depend very strongly on the paperwork presented to them—in this case, by the commission—and particularly in the Explanatory Memorandum. In the provision of additional information and, indeed, in a telephone call that I have had with an official today, the commission has been extremely helpful. There is absolutely no question but that it has tried to fill in all the gaps that we thought we had found. However, I repeat that the Explanatory Memorandum, as presented, was sketchy and almost opaque.
	Subsequent to the Merits Committee meeting, I have given the matter further thought and carried out further research, and, other than quoting the committee's conclusion, what follows is my personal view. My personal conclusion is that what was presented to the committee was the tip of an iceberg. I hope that I will be pardoned for putting it this way but when we drew this instrument to the special attention of the House, we just knew that it should be for special attention, although we did not quite know why. We said:
	"The Committee particularly noted the first of these changes to the 'diversion of income' ground for a departure or variation, which was needed because a recent Tribunal Case"—
	referred to by the Minister—
	"concluded that a non-resident parent could take advantage of changes to pension contribution legislation to reduce or avoid his child maintenance liability. The Regulations aim to close that loophole".
	Indeed, this afternoon the Minister gave us the date of 2006 as a change in the pension contribution conditions. However, none of that appears in the Explanatory Memorandum.
	I considered whether there was a loophole and, if there was, exactly what it was and how it would be closed. The regulations confer some sort of power to do something about pension contributions but that would appear to depend entirely on a judgment of what is reasonable as against a judgment of what is unreasonable. How will members of the public who are affected by the change in the circumstances be informed? Again, the Explanatory Memorandum simply says that a way of communicating with the public is being developed. I cannot remember which paragraph that appears in but I can quote it in terms.
	I suspect that the key to the Government's thinking is in paragraph 7.8 of the Explanatory Memorandum. I paraphrase it because it is written in quite a derogatory way and I shall try to take out that loaded part of it. It says that the existing diversion of income provisions do not apply to high pension contributions. Again, I think that that point has been well covered by the Minister. Indeed, that is what the tribunal found in the case that has been quoted, but I believe that it is not the only case in which these matters have been considered.
	My point is that in the original policy it was never intended that the provisions should cover pension contributions, because that was in the days when contribution limits were between 17.5 and 40 per cent. However, under the old scheme only half of those contributions applied as a disregard, giving a maximum of 20 per cent, and under the new scheme a higher maximum of 40 per cent. It is interesting to note that, at the time that the new scheme came in—which was before 2006—the Secretary of State could not have been worried about these pension arrangements being challenged as unreasonable. It was the Government's decision, in the two schemes, to make a departure a 50 per cent provision and to make a variation a 100 per cent provision. It was the Government's decision at that time to improve the circumstances of people subject to maintenance orders in respect of their pension contributions.
	When did the Secretary of State start to challenge this pension arrangement as being unreasonable? Is the case that has been referred to the only time that he has been, as it were, pushed back, or have there been others? Surely it must have been when the pension contribution limits were changed—very surprisingly in my opinion—to up to 100 per cent of income for both personal pensions and salary sacrifices in 2006 that the problem arose. Of course, the maximum then moves from either 20 per cent under the old scheme, or 40 per cent under the new scheme, to 50 per cent under the old scheme and, potentially, 100 per cent under the new scheme.
	This is why we get draft Regulations 2 and 4, which attempt to capture the present pension regime within the scheme of reasonable and unreasonable, so that high—or "extremely high" as it says in the Explanatory Memorandum—contributions can be captured. However, my question is: will they be so captured? Will the commission be able to override the present law on departure and variation pension provisions? These draft regulations add a criterion, but do not revoke the present, quite clear, arrangements for the treatment of pension contributions. What, indeed, will happen if these matters go again to the courts, as they have in the past and undoubtedly will again? These are highly emotional and difficult situations. It is unlikely that people will agree easily to the commission's definition of what is reasonable and what is unreasonable. I am pretty sure that that will be continuously challenged.
	There must be a better way. Before outlining that, I would be grateful for an assurance that this amending regulation is intended only to capture pension contributions, and that nothing else new is contemplated under the familiar heading of "diversion of income". If so, is there not a simple amending route, which would be to introduce a cap on the proportion of pension contributions that can be taken into account? Then, of course, these regulations could be revoked. Rough justice might indicate a cap of 40 per cent of income. It was, after all, an unintended consequence of un-joined-up government that led to the possibility of 100 per cent of income in some cases. It seems that there is a tremendous reason why we should introduce certainty, clarity and simplicity and not have a situation in which there is contention between the courts and the commission, the parents and the absent parent about what is reasonable and what is unreasonable. There is not, I submit, a very good way of solving this problem.

Lord Kirkwood of Kirkhope: My Lords, it is a pleasure to follow the noble Viscount, Lord Eccles. He has done the House a service with his forensic analytical examination of these regulations and I agree with what he said. I am one of those poor unfortunates who have been looking for clarity and simplicity in child support legislation since 1991, but it has always eluded me and continues to do so. I take a slightly different view from the noble Viscount. He has taken a very legal approach and I understand his analysis and support his attempt to solve the problem. Furthermore, he is right that these amendment regulations do not do the job at all. But from my perspective, this is all about clarifying rules and variations.
	I hate it when people say to me, "I told you so", but I cannot resist saying to the Minister that during our consideration of the Child Maintenance and Other Payments Bill 2008, I did tell him that we needed a general, catch-all provision for gratuitous alienation, as it used to be known in the old Benefit Agency days. There is no end to the creativity of non-resident parents when it comes to finding ways of not discharging their legal maintenance responsibilities for their children in the hands of the caring parent, and it is a false hope to think that we can draft a law to cover every eventuality. We have been discussing the particular loophole in relation to pensions, but if it is not pensions, another diversionary tactic will be along in a moment. The amendment regulations we are now considering are a direct result of the fact that a non-resident parent was shovelling two-thirds of his earnings into a pension scheme and thus reducing his income for child maintenance purposes. Not the agency, not the commission, not the commissioner and not the decision-maker could find a legal basis to challenge him, despite the fact that what he was doing was a denial of common sense that destroyed the spirit of the legislative base for the Child Maintenance and Other Payments Act 2008. None of those bodies could touch him because of the strict nature of the variation scheme introduced in that legislation. Everyone who applied their mind to it was left wanting in terms of a power to do anything about it.
	It is a simple fact that the variations rules are now so tightly drawn that they prevent common sense prevailing. I suggested an amendment to pave the way forward, and I dug out the briefing I used when I tried to introduce a new paragraph to Schedule 4 to the 2008 Bill entitled,
	"Prevention of maintenance evasion by non-resident parents".
	Admittedly it was a blunt instrument and drawn in a way that would give a decision-maker the discretion to apply a test of reasonableness on potential diversions of income. If that amendment to the schedule had been accepted and the power existed in the Bill, the decision-maker could have dealt with this case in a clear and straightforward way. We would not have needed this set of amending regulations.
	My charge to the department is this: it should have seen this coming. The noble Viscount, Lord Eccles, is right when he says that the legislative ink on this Act has yet properly to dry, and here we are, bringing forward in regulations fundamental amendments which, in a sensible system that produced watertight legislation—I hope we all aspire to do that in this place—would not be necessary. We failed in this case, in a way that I believe was foreseeable.
	The variation scheme is going to become even more important because as the Child Maintenance and Enforcement Commission progresses into the new regime, it will have to rely far more on HMRC data. That is going to be rough justice. The variation scheme will have to be applied to HMRC data in a way that will create all sorts of problems of this kind if we do not undertake a review of the current strictness of the variation regime that was introduced in the 2008 legislation.
	It pains me to say that under the old 2003 system before the last set of reforms were brought in we had an element of discretion to get a decision-maker to apply a common-sense test to attempts to alienate income. We made a complete hash of it in the 2008 legislation. I support these regulations as far as they go but they are not adequate. The noble Viscount, Lord Eccles, is right; we will need to return to this unless the Government rigidly and urgently undertake a review of the current variation scheme. There will nothing but trouble of this kind in the future until that gets done.

Lord Skelmersdale: My Lords, this is a very different statutory instrument from the other three we are discussing today. The noble Lord, Lord Kirkwood, made a surprisingly emollient speech and chose his words much more carefully than I am going to. Gallia, if I remember my Caesar correctly, in tres partes divisa est. So, too, is this order, or almost. One and two halves might be a better way of putting it. Taking the last part first, the Minister will remember that during our proceedings on the Child Maintenance and Other Payments Bill last year I told him of reports I had had of absent parents willingly reducing their disposable income by increasing their pension payments. Under both the old and the current child support schemes, this means that they will be due to pay less towards the upkeep of their children to the parent with care.
	The policy of all political parties is that it is a sine qua non that both parents should give financial support to their children, whether they are living with them or not, even when the parents live apart. The three formulas for assessing the amount that the latter should pay depend on the income of the non-resident parent. This is where the non-emollient comes in. I consider it a cheat for someone to reduce their income when approached by the CSA, now the Child Maintenance and Enforcement Commission. I believe that it was always intended that this should not be allowed, although, as we have heard, a recent judicial decision in the upper tribunal found that it was perfectly legal. So it is a legal cheat, if you like. Quite rightly the Government have decided to reverse that decision for the future.
	This is where my two halves of the order, to which I referred earlier, come in. Regulation 2 applies this revision to the old scheme and Regulation 4 to the current scheme, or, as my noble friend Lord Eccles questioned—and I am grateful to him for the enormous work he has put in to scrutinising this subject—do they? And that question was repeated by the noble Lord, Lord Kirkwood. From 2011 there is to be a third scheme, as set out in last year's Act. Regulation 4 seems to cover both the current and the new schemes. I hope the Minister will confirm that when he winds up.
	Listening to my noble friend Lord Eccles caused me to wonder what the position is of someone who has already intentionally reduced their income before the tribunal finding. Will variations be initiated and enforced by the commission or will they have to be instigated by the parent with care? This is a valid point. I go along with the noble Lord, Lord Kirkwood, but I have a strong suspicion that this order will be tested in the courts sooner or later. He knows much more about the courts than I do but that is my suspicion.
	So in 2011 there could, and I suspect will, be three schemes in operation. This is confusing for everyone, not least the parents in question, the CMEC which has to operate them, and advisers in such organisations as Citizens Advice. Both opposition parties have encouraged the Government to migrate non-resident parents onto the newest scheme. How is this proceeding? How many people are still paying under the original old scheme? By how much has this number fallen over the past few years? For those that remain, will they skip the current scheme altogether and be migrated onto the much simpler new CMEC scheme?
	The Government intend to halve the number of children living in poverty by 2010. One of the instruments for achieving this goal is the child support mechanism which is the background to this order. On the figures I have, the Government will miss their target by 500,000. Not, perhaps I may gently suggest, a very good omen for what will almost certainly turn out to be an election year. Of course, there are other mechanisms in place such as encouraging disabled people, lone parents and the long-term unemployed into work, as we will be discussing at length in the forthcoming Welfare Reform Bill. None the less, this is not going to be easy in the short term with the unemployment figures going up by the thousands on an almost daily basis and which must now stand at more than 2 million.
	Before I leave the issue of child support, I am grateful to your Lordships' Merits of Statutory Instruments Committee for pointing out a small difference in terminology. The old scheme uses the word "departure" when referring to legitimate reasons for having the non-resident parent's income reassessed; the newer scheme uses the word "variation". The committee is worried that there could be some confusion between the two words and recommends careful communication from the department for the elucidation of both parents and practitioners. What, if any, are the Minister's plans for this?
	The third plank of the regulations ensures that elderly non-resident parents will continue to pay maintenance up to the new pension age, which will be gradually increased for women between 2010 and 2020 and, ultimately, when the pension age of the two sexes is unified, up to 2050. This is pertinent for those parents who receive an allowance within the formula maintenance assessment if, for example, they are eligible for the disability premium in income support. I am grateful for the Explanatory Notes here, but I do have a question: surely the provision should be that they are "receiving" the disability premium rather than just being "eligible" for it.
	Despite my questions, like the noble Lord, Lord Kirkwood, I believe that these are very good regulations and I give them my blessing.

Lord McKenzie of Luton: My Lords, I thank noble Lords who have given the regulations their blessing. I shall deal first with the issue that has generated most of the debate with the noble Viscount, Lord Eccles, and the noble Lords, Lord Skelmersdale and Lord Kirkwood. I, too, offer a vote of thanks to the Merits Committee, which I know does sterling work. I served on the committee briefly—not with any distinction, I hesitate to say—and I know it does important work. I am sorry that it felt that the information it received in respect of these regulations was not sufficient.
	From the tenor of the debate it seems that they may have been taken somewhat out of context. The variation of income regulations, whether the old scheme ones or the new scheme ones, were not in any way changed by the legislation that we passed last year; they have been around for a little while. But there was a change in the tax rules and, until those tax rules changed, whether you were allowed to deduct 50 per cent or 100 per cent of your pension contributions, an effective cap was put on that because it was driven by the revenue rules; generally it was 15 per cent of your income. So the concept of someone pushing 100 per cent of their income into a pension scheme to avoid child maintenance obligations simply was not possible, and it was that which changed the landscape with which we are dealing.
	Notwithstanding that, it was assumed—wrongly as it turned out on the basis of the tribunal's judgment—that the issue which arose because of the change of the tax rules could have been dealt with under the pre-existing regulations relating to diversion of income. This has now been cleared up. The judgment stated that that did not work because it was not a diversion of income—it was not paying a dividend or a salary to a spouse that you were not taking yourself—but a taking of income and diverting and deploying it in a certain way. That is the lacuna, the loophole, which has been fixed by these regulations. It is no more complicated than that.

Lord Kirkwood of Kirkhope: My Lords, another one will be along in a minute. That was a very lucid and clear explanation, which I understood. However, the way to deal with this is to have a catch-all provision for the decision-maker to take account of these things, using his common sense.

Lord McKenzie of Luton: My Lords, I was going on to say that the changes to the regulations do not apply only to deploying income by way of pension contributions. They would apply equally to other payments that gave rise to a reduction in income for the purposes of the assessment. In effect, the process is substantially what the noble Lord is suggesting. There is an opportunity for the commission to make changes to the assessment. Those changes can be appealed against: there is a process whereby the non-resident parent, or the parent with care, can contest the evaluation. I think that that is what the noble Lord is seeking and that, in large measure, is what we have.
	The challenge that we faced with these provisions was not that they were ineffective in capturing income that was diverted: it was access to the provisions, because they required—and still require—a claim for their use, typically by the parent with care, before they can be put into effect. That was the issue that we discussed and I cannot recall that we spotted that deploying income to reduce an assessment could not be caught by these regulations.
	I understand the issue of having two systems and two sets of terminology. We should recognise that we are very much in transition. As the noble Lord, Lord Skelmersdale, said, we will move on in 2011 to what will be, in effect, a third system. Once we have gone through the transition and everyone has been migrated, we will end up with one system and one set of regulations common to all of those who are dealt with by CIMA.

Lord Skelmersdale: My Lords, how long will this take?

Lord McKenzie of Luton: My Lords, under the original timetable that we discussed, the new basis for assessment will be introduced in 2010-11, and it will take up to three years for the migration to be completed. We discussed that timescale openly when the legislation went through, and it still holds good.
	We want to make sure in particular, as we move towards the new system, that the legislation provides a duty and power for the commission to investigate variations, so that when it is possessed of knowledge that flags up that the diversion or deployment of income to reduce maintenance is heading in an unreasonable direction, there is a process whereby it can potentially trigger a claim, so that these provisions can bite. That issue is still less than clear. It is absolutely right to say that historically, the variations route has not been particularly effective for parents with care; not because the calculation is unclear, but because of the process that had to be gone through to establish it. That is something that can and will be fixed by the 2011 scheme.
	I turn to the question of whether to put on a cap of 50 per cent. When we looked at the basis of assessment for the new calculation, we debated frankly whether to put a cap on pension contributions. What persuaded us to rely instead on the improved variations route, now made more effective by these regulations, was the reliance on gross data from HMRC. That was a significant change in the basis for dealing with child maintenance. It took us away from the problems of the past, when we relied on non-resident parents to declare income. Being able to rely on HMRC data that come automatically through the system is crucial. In relation to occupational pensions, the data come net of the gross payment. That is why we did not look to cap pension contributions; because we would have had to use that data, analyse it in some other way and go back to the problem of not having speedy data on which we could rely.

Viscount Eccles: My Lords, I am not sure that what the Minister has just said applies to salary sacrifices because they are not income at all. They are a payment that the employer does not make, and therefore I do not think they count as income and do not come through on the individual's tax return.

Lord McKenzie of Luton: My Lords, the noble Viscount makes an interesting point about salary sacrifices but the point I was making was about occupational pension payments, which are deducted—

Viscount Eccles: Yes, my Lords, but one of the tribunal decisions, which has been the cause of some trouble, was about a salary sacrifice scheme. It is not just this one case that has gone to a tribunal; there have been others. The one that has been quoted is fine, but in the salary sacrifice case the tribunal ruled that it could not be taken into a diversion-of-income consideration because it never was income; it was a salary sacrifice and was therefore never paid to the individual.

Lord McKenzie of Luton: My Lords, it seems to me that salary sacrifice, if you are forgoing something for another benefit in some other form, is a diversion of income. I hang on to my point that in terms of constructing the basis of the new scheme, this was done on the basis of needing to have HMRC data that could be used straight away without needing to be adjusted in any way. If people were playing the game in terms of the level of their pension contributions, and if, as they overwhelmingly do not, people routinely did not seek to abuse the system, we would just take that data. If we had to say, "Well, only 50 per cent of it is allowable", then there would be some other process in the system. That is what we looked aside from, and looked instead to rely upon the variations—the diversion of income—as now bolstered so that it addresses not just the diversion of income but also the issue of getting income and then deploying part of it, which nets off the income in a way that produces an unsatisfactory result.
	I hope that that has explained why we have ended up where we are. The noble Lord, Lord Kirkwood, is looking a bit sceptical. I am happy to run over this again or perhaps talk to him afterwards, but I am sure he will reflect on our discussions. That is the substance of these regulations, and I agree with the sentiments of the noble Lord, Lord Skelmersdale: it is outrageous that people should seek to use these mechanisms in order not to pay their proper dues in respect of their children. Thankfully, only a very few do so. This is not widespread; if it were, that might have affected the judgment we made about constructing the new scheme.
	The noble Lord, Lord Skelmersdale, raised the changes regarding the disability premium. That was nothing to do with changing the age at which pensioners might be responsible for the child maintenance; it is just that in the old scheme, and in that scheme only, an allowance that the non-resident parent—or, I think, the parent with care—could get was described in terms of an allowance that was receivable by the age of 60. That is changing because it is linked to pension credit, which is linked to state pension age, which, in turn, is changing for women. The noble Lord asked whether the proper description of that should be "receiving" or "entitled". I would like to take that point away and look at the detail of the regulations, and I will write to him about it if necessary.
	I thank noble Lords for their engagement on this. It has clearly exercised the Merits Committee, which is good, and the challenge is entirely appropriate. I hope that I have been able to explain why this particular component of the regulations has gone in as it has. I hope, therefore, that the regulations will be supported.
	Motion agreed.

Guaranteed Minimum Pensions Increase Order 2009

Copy of the Order
	5th Report from JCSI

Motion to Approve

Moved By Lord McKenzie of Luton
	That the draft order laid before the House on 28 January be approved.
	Relevant Document: 5th Report from the Joint Committee on Statutory Instruments.

Lord McKenzie of Luton: My Lords, I am satisfied that the orders are compatible with the European Convention on Human Rights.
	The uprating order will increase most national insurance benefits by the retail prices index for last September, which was 5 per cent, and most income-related benefits will increase by the Rossi index, which is the retail prices index excluding rent, mortgage interest, council tax and depreciation and was 6.3 per cent on the same date.
	The Guaranteed Minimum Pensions Increase Order provides for contracted-out defined benefit schemes to increase their members' guaranteed minimum pensions that accrued between 1988 and 1997 by 3 per cent. Increases are capped at this level when the retail prices index exceeds 3 per cent.
	This year, the uprating order that will come into effect from April will add almost £6.2 billion to government spending. Of this, almost £4 billion will go to support pensioners, £1.2 billion to working-age people, £890 million to disabled people and carers and a further £70 million to children. The basic state pension will increase by £4.55 for a single pensioner to £95.25 a week. A pensioner couple will see an increase of £7.25 a week to £152.30. These increases are, against a backdrop of falling inflation, in line with the highest increase in inflation last year.
	For pensioners on the lowest incomes, the order will increase the standard minimum guarantee in pension credit by £5.95 to £130 a week for a single pensioner. Couples will see an increase of £7.25 to £198.45 a week. These increases are the highest since pension credit was introduced in 2003.
	This year, we will be spending more than £13 billion more on pensioners than if we had continued with the policies that were in place in 1997. Pensioner households are on average £1,600 a year, or £31 a week, better off and the poorest pensioner households are on average £2,200 a year, or £42 a week, better off than they would have been under the 1997 system.
	We have taken further action this year to help pensioners. For example, this winter we have increased the winter fuel payments by £50 for households with someone aged 60 to 79 and by £100 for households with someone aged 80 and over. We are helping further by making an additional Christmas bonus payment of £60 this year. This takes the total value of the Christmas bonus for 2008-09 to £70. This additional support will not just help pensioners; it will help all of the 15 million people who receive the Christmas bonus, including those people receiving disability or bereavement benefits.
	Noble Lords may have seen a Written Statement tabled by my honourable friend in the other place that relates to issues concerning payments of invalidity allowance to pensioners from April 2009. The Statement highlighted a technical error that means that some pensioners might not receive correct state pension payments from April. Around 45,000 people may be overpaid and around 25,000 underpaid, depending on their circumstances. The weekly overpayments will range from 5p to a maximum of £3. The maximum underpayment will be £1.80 a week. Any customer who has been underpaid will receive the arrears owed to them. We will not seek to recover any overpayments. Customers need not take any action.
	As people become pensioners from April 2009, they should automatically move on to the higher rate of invalidity allowance paid to pensioners. Because the uprating order for this year does not provide the statutory basis ordinarily needed to make these higher payments, we shall be making them on an extra-statutory basis in the coming tax year. Around 7,000 customers are affected with payments worth in total around £350,000. I can assure noble Lords that the Pension, Disability and Carers Service will identify and correct cases as soon as possible and contact all of those concerned to explain their position.
	The uprating order before us today also increases working-age benefits. Most working-age income-related benefits will increase in line with the Rossi index of 6.3 per cent. We use the Rossi index to increase most income-related benefits because housing costs are usually met separately by those benefits. This year's increase means that, for example, the personal allowance for a single person over the age of 25 will increase from £60.50 a week to £64.30. The amount for a couple will increase from £94.95 to £100.95.
	Families who receive income support or jobseeker's allowance will continue to see the full value of any increase in their child tax credit because their child-related allowance will increase in parallel with child tax credit rates by almost 7 per cent from £52.59 to £56.11.
	From April, incapacity benefit will be increased by the same measure as employment and support allowance, the Rossi index, so that, over time, all customers in similar circumstances will receive the same level of support. Incapacity benefit customers with an age addition will not, as originally suggested last summer, have their benefit rates frozen. Instead, such customers with an age addition will see their overall benefit increase by at least half of Rossi; that is, 3.15 per cent. This means that they will not receive less than £95.15 a week, which is the same amount of incapacity benefit as received by someone in the support group getting contributory employment and support allowance.
	I hope that noble Lords will welcome these increases at a time of economic downturn. The cost of uprating benefits for next year is almost £6.2 billion and will take total benefit expenditure for the next financial year to an estimated £142 billion. I commend the orders to the House.

Lord Kirkwood of Kirkhope: My Lords, these are important orders and this is an important debate. A lot of the upratings are done on the basis of formulas. I am absolutely content that the Government are doing what they are required to do under the provisions of 1992 uprating legislation.
	I shall try to concentrate on two points. First, I am very nervous about the extent to which childless, in-work family incomes are not being looked after as much as have been those of other categories of households in the past five or so years. It is obvious that one cannot give priority to everything but, looking at some of the figures for the support levels available under the new upratings, which take effect for rest of the year from April 2009, I fear untoward effects on people in that category simply because they are not among the target groups, such as families with children and pensioner and/or low-income households, on which the Government have rightly concentrated and where a lot of progress has been made. Will the Minister say a word about the future plans for that?
	We have seen organisations such as the Joseph Rowntree Foundation quantify what levels of regular and ongoing annual uplifts in the benefits system are necessary to reach the Government's own targets of 2010 and 2020 for child poverty. I hope that the upcoming Budget will give us some sight of the Government's programme for meeting their target. The figures that the Rowntree foundation have produced are robust and a large sum of money, in the region of £4 billion, is involved, but its work indicates quite clearly that, where the Government have specifically targeted sums of money of that order through the benefit uprating system, the result is directly consequential and child poverty reduces as night follows day. The mechanism works, but we need the consistent, year-on-year commitment to try to deal with the problem if we are to get where the Government want to be in 2010 and 2020. A lot of work needs to be done to ensure that.
	Another increasing problem is emerging in these rather strange financial times. I have no idea what is going on in the long term and wonder whether anybody else has; it is really quite dire. The Minister will of course know that when people are tested for eligibility for means-tested benefits, there is under the established rules an imputed level of income from capital sums. The imputed level of interest is much higher than anything that my bank manager is likely to give me any time soon in these new, maybe temporary circumstances. It must be unfair that low-income pension householders, when applying for means-tested assistance to which they would be otherwise entitled, find that the department says, "Well, the interest from that £1,500 you've got, multiplied by 5 per cent"—or whatever the going rate is for the imputed level of interest—"takes you over the limit and therefore you are denied access to the means-tested benefit". That is perverse and unjust in these financial circumstances. If we are in these uncertain times for as long as we might be, the Government will need to revisit the capital imputation rules for eligibility to means-tested benefits.
	I hope that the Minister will put pressure on his departmental colleagues, particularly in the Treasury, to address some of these longer-term—2010 and 2020—problems in the upcoming Budget. If they do not, the targets will not be met, which will be in no one's interest.

Lord Skelmersdale: My Lords, it is for the convenience of the House that, traditionally, we debate the Social Security Benefits Up-rating Order for 2009, or indeed for any year, with the Guaranteed Minimum Pensions Increase Order. To take the second one first, as Ministers tend to do, I must admit to surprise. The reason for the uprating is clear enough. It sets out the amount by which contracted-out defined benefit schemes must increase members' guaranteed pensions that accrue between 1988 and 1997, in order to make up the amount that was contracted out of the state scheme—in other words, broadly equivalent to SERPS. My confusion is that Ministers have always told us that, where inflation is more than 3 per cent, primary legislation says that 3 per cent is the amount of the uprating. Indeed, this order imposes that cap.
	However, in the legislative frenzy that the Government have unleashed on us in the past 11 years, no thought, not even the whisper of one, seems to have been given to whether the cap is valid any longer. I understand that, in a period of low inflation—which thanks to the golden legacy of the national accounts bequeathed to the Government by my right honourable friend Kenneth Clarke, and to an extent continued by their policies, although not obviously recently—there has been little need to think about this. However, the relevant inflation figure under the 2007 order was 3.6 per cent. Last year, it was 3.9 per cent. This year, it is 5 per cent. All of us are delighted that it is falling again and we have reports that we may be having zero or even negative inflation next year. However, in the longer term, the prognosis is not anything like as rosy.
	It is an economic truism that inflation is caused by too much money chasing too few goods. I like to put that another way: it is caused by increasing the money supply when goods are not available to be bought. That is exactly what is about to happen. Billions have been given in support to banks and loans to businesses, as was announced last year; they are starting to be available but only with guarantees from businesses that were not made clear at the time of the announcement—I refer to money to support the car industry and the building of more social housing units. It seems that more and more money is being thrown around by this frenetic Government. So, in future, as I say, inflation is bound to rise. Indeed, it is only falling now due to external factors such as the price of oil. In these circumstances, is it not wise to at least look at the validity of the cap?
	The subject of inflation brings me to the general uprating order, whereby most national insurance benefits are increased by 5 per cent. These include basic state pension, carer's allowance, attendance allowance, disability living allowance and industrial injuries benefits. Income-related benefits are increased, surprisingly, by even more, by the Rossi index, which the Explanatory Memorandum informs us is in use. Housing costs are typically met by specific provision within these benefits, whereas there is no specific provision within the benefits I have mentioned. Normally, the Rossi index is lower than inflation —I refer, for example, to the order of 2007 or 2008. The fact that it is higher now shows us that over the past year non-housing costs have increased substantially. I hope that I got that right; sometimes when I think about things I get them upside-down. Given the current state of the economy and the fact that the Government have announced a new social house-building initiative, will the expectation of the RPI and Rossi coming closer today live up to reality and help to keep the Rossi index down without increasing inflation?
	Housing costs bring me straight to pensioners, who may well not be helped by any state benefits at all, with the exception of the state pension. Following the comments of the noble Lord, Lord Kirkwood, yes, indeed, they may be eligible for that much-vaunted government scheme of pension credit. The Government state proudly that with pension credit no single pensioner need live on less than £130 a week, nor a pensioner couple on less than £194.45. is that invariably correct? Some of them, as the noble Lord, Lord Kirkwood, has just pointed out, will have small savings—perhaps many. Neither I nor the Minister knows. The problem for them is that the bank rate is so low that they are getting almost no gross return on their savings and, due to inflation, a negative real return.
	As I understand it, although I am not an expert like my noble friend Lady Noakes, the pension credit rules say that savings are deemed to have a 10 per cent return, so for every £100 saved pension credit is reduced by £10. If I am right, for pensioners with small savings, it is no longer true to say that no single pensioner should need to live on less than £130 a week. If my theory is correct, as I believe it is, what are the Government going to do about it? It cannot be the policy intention that pensioners should be in receipt of less than the maximum allowable under pension credit from all sources.
	It is noteworthy that the Prime Minister in the Times on 28 September 1993—this is going back quite a long time—said:
	"I want the next Labour Government to achieve what in 50 years of the welfare state has never yet been achieved—the end of the means test for our elderly people".
	What do we see today? Not only do we have the pension credit scheme, which tops up poor pensioners' incomes, as I have mentioned, but it is means tested and pensioner poverty has risen by 300,000 more than in 1997. the much respected Institute of Fiscal Studies predicts that the proportion of over-65s below the poverty threshold will remain around one in five for at least the next decade. Currently, some 20 per cent of retirees live on less than 60 per cent of the average income.
	As we discussed on Tuesday, one benefit that the Government give to pensioners is the winter fuel payment. What we did not discuss is whether all pensioners have now received the full amount. Have they? That question also applies to the extra £60 announced in the PBR, to which the Minister referred in his introduction, which is to be given to the 15 million or so people who receive the £10 Christmas bonus and which has the effect of bringing forward the uprating of the state pension from January to April—in theory, anyway.
	What, too, about the working population, or rather the non-working population? Ministers like to wax lyrical over the 1 million new jobs created since 1997; what they are rather shy about is who fills those jobs and where they are. Despite the Prime Minister's phrase, "British jobs for British workers", is it not true that two-thirds, some 660,000, have gone to foreign nationals? How many of those jobs have gone into the real economy rather than the public sector? How many, too, will remain? I heard over the weekend of a council intending to slim down its planning department; there are reports this week of reductions in the police force. I have yet to hear of planned redundancies in the National Health Service or, indeed, Whitehall. I did, of course, hear of such in job centres. Given the almost 2 million unemployed—soon, the general belief is, to reach 3 million—the redundancies have rightly been halted. Does the Minister expect more frontline staff to be needed to cope with the increasing number of claimants? What has been the total number of extra claimants of jobseeker's allowance since we last debated this order—or, if the Minister prefers, in the last calendar year?
	I know, of course, that almost 5 million people are on out-of-work benefits of all sorts, and that youth unemployment is at its highest total since 1995. In spite of some activity in this area, these stark facts remain after 11 years. I cannot believe that the Government are proud of that. Indeed, one of my honourable friends called it a "did nothing Government" when referring to this area of policy. That might be a little harsh; they tried to do something but have not been terribly successful. As I have said, this figure is rising fast. What, then, is the light at the end of the tunnel that the Employment Minister talked of the other day? Where are the "green shoots" of the noble Baroness, Lady Vadera?
	I have in the past been critical of the drafting of this order, especially in regard to payment dates. I find this year's order much clearer, though the thorny problem of Wednesdays recurs. For some arcane reason, Wednesday seems to be the day on which many payments for carer's allowance are made. However, in Article 6, carer's allowance is paid either on 8 April—in other words, on the first Monday of the financial year—or, where the Secretary of State so determines, on the first Wednesday, which, as Article 6 correctly states, falls on 8 April this year. Why have the department not streamlined payments so that they all start from the same day, as, indeed, happens with other benefits?
	I also note Article 14, which tells us that the rates of age addition to long-term incapacity benefit have actually gone down. I was rather surprised by what the Minister had to say on that. Perhaps he can give further explanation when he winds up. This and the traditional invalidity allowance are the only benefits where this appears to have happened. I have always understood that such rates are increased by half of the Rossi index. Indeed, I have never experienced a decrease before. As I said just now, it would be helpful if the Minister could explain this a little more fully because I, for one, did not take it in.
	All that said, no one can deny that the order represents a right and proper use of taxpayers' money and we on this side of the House give it our blessing.

Lord McKenzie of Luton: My Lords, I thank both noble Lords for their contributions and understand that, despite some of their challenges, they support the order. I shall try to deal with the points that were raised. The noble Lord, Lord Skelmersdale, asked about the age addition to long-term incapacity benefit. He may remember that when we debated the employment and support allowance, we recognised that the age addition had no part in that because that benefit was structured to help people get back into work. The age addition was associated with incapacity benefit where basically we paid people and did not engage with them. He may recall that a year ago we thought that to eventually align incapacity benefit with employment and support allowance we would not uprate incapacity benefit claimants who had the age addition at all until they met with the same rate as the employment and support allowance. We have changed that this time round and are uprating by half Rossi. We are not uprating by the full Rossi, which is what incapacity benefit claimants without the age addition or employment and support allowance will be uprated by. Therefore, the path to aligning those rates will be longer but I hope that the noble Lord sees that as a helpful change.
	The noble Lords, Lord Kirkwood and Lord Skelmersdale, referred to the "tariff" income and the rate of interest that is applied to that. Those arrangements were introduced under the previous Conservative Government back in 1988 on a less generous basis than is currently the case. The tariff was never constructed as an interest rate: it just recognised that people who have a certain level of capital should progressively contribute, the more capital they have, towards the benefits that would otherwise be due to them. That was the basis of the measure. But somehow a campaign has emerged that this constitutes a 10 per cent interest rate without recognising how it is calculated. The first £6,000 of a person's capital is ignored completely. Once you go above £6,000 for pensioners there is a deemed income of £1 per week for every £500 in excess of £6,000. You could say that £1 a week on £500 equates to 10 per cent on that marginal amount, but that would not be a fair assessment of the picture.
	The other thing relating to pension credit is that about 80 per cent of people who access it are not affected by the tariff. They simply do not have that level of capital. Sometimes we can look through this issue through the wrong end of the telescope.
	Picking up on the issue of savings, and to put it in context, 42 per cent of pensioners receive less than £1 a week from investment income. Indeed, 70 per cent of pensioner benefit units receive less than £10 a week. Although some of those households have lost income as interest rates have declined, the extra money that the Government have put in, particularly through the Christmas bonus, has helped to compensate for that.
	The noble Lord asked specifically whether all winter fuel payments are now received. I cannot confirm that without checking specifically. Most of the payments are made automatically. Some people who may be newly entitled, who have not previously been in the benefits system or received council tax or housing benefit—this might affect men particularly between the ages of 60 and 65—are not necessarily known to the department and therefore need to make a claim. If they have not made the claim yet—they have, I think, until March of this year to do so—the payment will not have been made. However, it is right to say that overwhelmingly those winter fuel payments have been paid. I do not have a precise update. The whole purpose of linking the payments to assessment in the third week in September is so that the payments can be made before Christmas.
	I cannot be precise on the Christmas bonus. We said that it would become payable between January and March, and I understand that we are still on track to meet that. The Christmas bonus route was taken because it was generally the quickest and most effective way, given the systems that we have, to get money to the most vulnerable people.
	The noble Lord also asked about the capacity of Jobcentre Plus and whether it is coping. Clearly it faces significant challenges; there was a programme on Saturday morning on the telly about people presenting to Jobcentre Plus from professions who have not previously used it. There are emerging challenges from the current environment, but £1.3 billion extra has been put in and Jobcentre Plus is recruiting staff to make sure that we meet the challenges. I believe that we are still meeting our target times for dealing with claimants.
	Figures for the current claimant count are published monthly; I am not sure when the next figures are due—probably in a couple of weeks.

Lord Skelmersdale: My Lords, any minute.

Lord McKenzie of Luton: Any minute, my Lords. There we are. That will provide the most up-to-date figure. I should say also in relation to Jobcentre Plus that the claimant count may be rising, but people are still finding work. People are coming off jobseeker's allowance, although, sadly more are going on.
	The noble Lord—I was going to say, waxed lyrical, but I am not sure that that is fair, because I do not agree with him—gave an economic analysis about where inflation was heading. I would not accept that inflation is bound to rise. We know that it looks as if in the short term it is going in very much the reverse direction. It is not predicted, but we have made clear that should inflation go to zero or even lower, there is no question of reducing benefits. Obviously, what happens will have to be assessed at the time, but we are also committed to uprate the state pension by 2.5 per cent whatever as a minimum. I give the noble Lord that reassurance, but I would not accept the assertion that inflation is bound to rise. I would not accept the description of quantitative easing as printing money. That is too simplistic an analysis of what is happening.
	The noble Lord, Lord Kirkwood, asked about child poverty. I confirm that our declared aim is to eradicate child poverty by 2020. Our goal is a society where no child's life is scarred by poverty and every child has the chance to realise their potential to achieve extraordinary things. Our record demonstrates that we are seeking to tackle that, reversing two decades of a rising trend. Our policies have already lifted 600,000 children out of poverty, and halved absolute poverty.
	In September last year, the Prime Minister demonstrated the Government's renewed impetus to tackle child poverty by signalling his intention to legislate to end it. We will have that legislation before the House some time soon. When this Government came to power, there were 3.4 million children living in poverty. There are currently 2.9 million, a fall of 600,000, so we are addressing that issue.
	The noble Lord, Lord Kirkwood, slightly conflated the issues of child poverty and couples without children. He rightly identified that we have to prioritise in these situations, and we have prioritised the importance of supporting families and children. We need to break that cycle of deprivation if we are to have a long-term impact on our country and everyone's life chances. I hope that I have responded to all of the points that were raised, although the noble Lord, Lord Skelmersdale, looks as though he is going to challenge me on something.

Lord Skelmersdale: My Lords, is the Minister aware that I am absolutely amazed that he finds time to watch television on a Saturday morning?

Lord McKenzie of Luton: My Lords, perhaps I should explain that that was in between breakfast and opening the Red Box. I get some rather good viewing on Saturday morning—but I digress. I ask noble Lords to support the order.
	Motion agreed.

Social Security Benefits Up-rating Order 2009

Copy of the Order
	5th Report from JCSI

Motion to Approve

Moved By Lord McKenzie of Luton
	That the draft order laid before the House on 28 January be approved.
	Relevant Document: 5th Report from the Joint Committee on Statutory Instruments.
	Motion agreed.
	House adjourned at 7.27 pm.